like everything in life there are winners and even more losers. i do what i do you do what u do..but volpri shares way more than i ever would. why tell the masses..when u want that price and 400 others do too and u have a 20 lot you will see the folly in sharing.if u plan on growing then u keep it to yourself why get a bloated ego from helping losers when you need them to lose. hey i found the cure to cancee..i posted it on my blog...lol.
Tell me why averaging down is a bad idea .
- Thread starter joker542
- Start date
What is your opinion of a good risk per trade ? I've always thought 1-2% was a bit low for scalper also. 5% make more sense to you ?
Keep it simple..Run a simulation,look at the underwater equity graph(vs open) vs MFE. Use a time stop for the first go round.Its a good exercise and should answer the question,or at least let you know what you are up against,and what your chances of success are should you choose to average in,and if you are indeed taking on very low probability bets.
Its a very good starting point.From there you can add hard stops,profit targets,exit rules and scaling..
Its a very good starting point.From there you can add hard stops,profit targets,exit rules and scaling..
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I personally have no problem using 10%-20% because I have a high win rate AND I keep all my accounts small. Just enough for using the scalping techniques and max size I would scalp. If a brokerage were to go belly up I don’t want to go through all the waiting to get my money...etc. So, I spread scalping monies over more than one account. Just another step of protection. In addition, I am protecting myself from myself. I could, for instance, blow a futures account (although I never have) and still not wipe out my trading capital.
Plus using 10% to 20% I have to be very brutal when I am wrong and just recognize I am wrong and exit very quickly, especially with averaged down positions. It helps to reinforce discipline to exit when wrong. If I have, say, at risk 15% of my account on a trade that has gone bad. It forces me to make a decision. Whereas, if I had a very large amount in the account I might be lax on doing what I should be doing (and that is exiting the loser) thinking I still got plenty of money in the account to ride this out.
I would not recommend any beginner to trade the way I do until they have mastered scalping and have a high win rate. High win rate is the most important metric especially for a scalper and really for any kind of trading. I know 1000’s of gurus and traders would disagree with me on this point but IMO, winning, just plain all around winning, can’t be beat. It is as simple as that for me. Winning has psychological and of course monetary implications. I will take my profits as the market gives them to me. I can always enter again and usually at a cheaper price than I exited previously thus compounding my profits. There are a few instances I will go with the run...strong BO’s ...tight channels...Small Pullback Trends in bear and bull trends where price mostly stays above or below a 20 EMA throughout the pb’s.
Finally, I’m not a youngster that feels like I have to grab the world by the tail, like grabbing a tiger by the tail, to prove my prowess and worth. So, I am not gonna trade ridiculous size just to be trading size. And I’m not gonna be averaging down just to not take a loss. There has to be a good reason and premise for me to average down on any trade. And I would declare, that, at least for myself, I have found various reasons to average down that increases my probabilities that a trade will end up being a successful trade.
The process. I just try to work the process.
I only had a few minutes to trade today but here is how a couple hundred can be made averaging down in MES in the RIGHT context and going for a measured move down (blue lines). After comm 170.72 Twelve contracts per side traded for a total of 24 contracts done 6 trades. Lost 10 on first trade then made it back and the rest.
One might argue that your success today was more about showing patience and choosing an advantageous entry and not about averaging down per se. Which is likely the salient point to it all.
They say there's no long term support in bear markets and no long term resistance in bull markets.
You might be able to catch the moves, but one of the things that i've found THE HARDEST to predict is how high or how low the price will go(the duration of the trend).
I'd say adding to a losing position is only acceptable when you have a clearly defined invalidation level where you will stop yourself out. The problem with everyone fresh is that they don't know when they are wrong, they are blindly shorting strength and buying weakness(that's what i did). "It's gone up too much" or "It's getting oversold". To have a clear invalidation level though, you have to wait for the bottom or top to form first and not blindly anticipate where it will form.
What happens is you will use a lil bit too much leverage, or you'll keep adding to your position until you emotionally can't bear the losses anymore and you will capitulate, only to see the market go in the direction you anticipated shortly after. You end up being "right", but losing a lot of money at the same time.
Markets can continue to be grossly oversold or overbought for a long period of time. Just look at bitcoin since april till end of May. It just kept going up and many people just kept shorting.
You might be able to catch the moves, but one of the things that i've found THE HARDEST to predict is how high or how low the price will go(the duration of the trend).
I'd say adding to a losing position is only acceptable when you have a clearly defined invalidation level where you will stop yourself out. The problem with everyone fresh is that they don't know when they are wrong, they are blindly shorting strength and buying weakness(that's what i did). "It's gone up too much" or "It's getting oversold". To have a clear invalidation level though, you have to wait for the bottom or top to form first and not blindly anticipate where it will form.
What happens is you will use a lil bit too much leverage, or you'll keep adding to your position until you emotionally can't bear the losses anymore and you will capitulate, only to see the market go in the direction you anticipated shortly after. You end up being "right", but losing a lot of money at the same time.
Markets can continue to be grossly oversold or overbought for a long period of time. Just look at bitcoin since april till end of May. It just kept going up and many people just kept shorting.
And that clearly defined level I had. Must always have. If it gets there my premise is wrong. I’m exiting and waiting for a chance to double or triple up in the new direction. I get back my loss with alot less movement and soon in the greenbacks again. That is the life of a scalper.
The only reason I had a loss in these few trades today was strictly a mistake. I meant to add on to that entry #1 where I exited it but hit wrong side of the dom. That was done by mistake and was by no means a SL getting hit. As you can see I immediately entered again with the short2 entry and then a few minutes later added to it.
I don’t use any overbought/oversold indicators. I only use what you see on my chart which is two Moving Averages. The advantage of scalping on a 5 min chart or less is my so called LONG periods of time is usually seconds or minutes. Occasionally 20 min. or so. Most are 1 to 5 minutes. NEVER EVER from april to May...LOL ..I would not sleep at night. If price don’t move my way pretty quick it is adios amigos.
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