Talk me out of averaging up!

T

taojaxx

Got lucky: went long Oil futures (Sept CL) @ $74.62. (1 contract, I'm small fish). Next thing I know, off to the races, now $78.80 or so.
So I'm thinking let's double up and put a stop loss at cost, $76.71, so I'm riding on House money: moves up I win, moves down no loss.
Looks brilliant, don't it?
Reason I'm asking is I hate the technicals: 50DMA way below 200DMA, looks like a slow death curl on longer time frame. Only positive is it pierced up both 200 and 50DMA.
What's y'all's opinion? Don't mean I'll follow it, but I'd like to know: Listen to all first and do as you think then.
 
Your way of trading :

long 1 lot @74.62
long 1 more lot @ 78.80



Other people's way of trading :
long 2 lots @74.62
close 1 lot @78.80 & take some profit


Those who have been averaging up will never never
give up averaging up.
They will continue to do it till the end of time.
They will give excuses like MA crosseses and those things.
It is impossible to change their mindset.


Enjoy your Averaging-up with those MA crosseses !
 
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You could enter on corrections in shorter time frames. For example, I used a 30 minute, all trading hours chart on crude and overlaid 3 - 60 period Keltner Channels with ATRs of +/- 1, 3, and 5. There appeared to be a solid add on opportunity after your initial long when crude corrected to about the -1 ATR line.

There are so many different ways to trade. It is up to each individual to have a think, experiment, and ultimately decide what works for them. Instead of Keltner Channels, support/resistance lines could be used to manage initial entries, scale-ins, scale-outs, and exits. Again, you need to decide what works best for you.
 
Everything has to be tested.

I once did a test on martingale vs reverse martingale. The result was that without an edge to begin with neither will prevail in the long run. But if you did have an edge it's my belief that averaging up would be better. That will eventually be tested.

This guy shows what can happen if you average up. But in my opinion, unless you have some rule about where to take profits, these opportunities could be lost.

 
taojaxx said:
Got lucky: went long Oil futures (Sept CL) @ $74.62. (1 contract, I'm small fish). Next thing I know, off to the races, now $78.80 or so.
So I'm thinking let's double up and put a stop loss at cost, $76.71, so I'm riding on House money: moves up I win, moves down no loss.
Looks brilliant, don't it?
Reason I'm asking is I hate the technicals: 50DMA way below 200DMA, looks like a slow death curl on longer time frame. Only positive is it pierced up both 200 and 50DMA.
What's y'all's opinion? Don't mean I'll follow it, but I'd like to know: Listen to all first and do as you think then.
More...
I'll try talking you out of averaging up atm.
Markets are choppy, this is not an investors market but it better suits day traders.
No sooner does something rise it gets bashed down again, then something else has its turn.
CL cash and futures both have recently broken out, but there is risk of traders taking profits here, with futures resistance at $81.
CLU23_Barchart_Interactive_Chart_07_25_2023(1).png
 
taojaxx said:
Got lucky: went long Oil futures (Sept CL) @ $74.62. (1 contract, I'm small fish). Next thing I know, off to the races, now $78.80 or so.
So I'm thinking let's double up and put a stop loss at cost, $76.71, so I'm riding on House money: moves up I win, moves down no loss.
Looks brilliant, don't it?
Reason I'm asking is I hate the technicals: 50DMA way below 200DMA, looks like a slow death curl on longer time frame. Only positive is it pierced up both 200 and 50DMA.
What's y'all's opinion? Don't mean I'll follow it, but I'd like to know: Listen to all first and do as you think then.
More...


On another forum one guy asked us to talk him into not smoking weed. Once I am finished talking him out, I will come and help you.
 
sridhga said:
On another forum one guy asked us to talk him into not smoking weed. Once I am finished talking him out, I will come and help you.
More...

huh? He might end up doubling or tripling the weed dosage.

Similarly, if we advise traders not to do averaging, they will double down on their averaging.
 
Averaging up like that are good for the rare special circumstances when most market participants are caught on the wrong side and the trend keeps going for hours for clear reasons. You will probably recognize it when you see it (of course having the balls to go through with leaning in aggressively is another story). The challenge is to avoid doing it at all other times when it will just diminish your profits.
 
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