Tell me why averaging down is a bad idea .

[volpri]

volpri, your posts are so instructive.

I wonder how long it took you to develop this approach, what led you to it (Brooks ?) and was frequent trading like this instinctive from the start, or did you have to work to develop it ?

Well I hope they are. I have no secrets. Actually the more people learn about these tactics and implement them the more precise it becomes.

How long? I was scalping long before I ever heard of Brooks. I have always leaned towards getting what the market gives me before it takes it away again. I started learning about the markets in the late 1980’s.

Brooks put to the pen techniques and strategies to implement good concepts for scalping in any environment (well 95% of the environments) that a trader will encounter in the markets. Kudos to him. Nevertheless, most traders who attempt to master what he teaches simply give up. That is their problem. He gives the most comprehensive treatment of Price Action of any trader or training organization that I know of and does so at a very affordable price. Not thousands of $$$ like many others charge but simply a few hundred $$. I am not a shill for brooks but I can only say that in my experience I have found no one else that comes close to what he dishes out in his trainings. But one does have to give it time to understand his way of communicating. It took me a few years to get in the flow of his communication style and what seemed like double talk suddenly made sense.

 

[CharlesS]

B.B. -- Before Brooks

I've learned a huge amount from Brooks, more than from anyone else, but do not yet intuit charts the way he does -- his narratives and hypotheticals always make sense, but when I look at a new chart I don't have have his analytic conviction, at least not per his favored concepts, eg Major Trend Reversals.

What I find most valuable in his course is its inventory of a large number of price action data points, and his method of analyzing the most contextually salient subset of that data in thinking through / anticipating multiple possible developments and responses. This has led me to all kinds of insights that are nowhere in his (or others) presentations.

I sometimes wonder if he has undisclosed middleware that groups price action data points into a conceptual model that underlies higher level concepts that he communicates publicly.

 

[REDP1800]

Thats exactly how I make my bread, day by day. But most people dont want to listen, at least not listen to something they dont like or understand.

It is like with most things in life. If you want to be different, you cannot run with the crowd. You have to do the opposite, just like you said. Easier said than done, and too hard for most people. But thats just how nature, the world is made.
There is not enough space for everybody on the top of the mountain. Most people are placed in the belly of the bell curve (https://en.wikipedia.org/wiki/Normal_distribution), and most of them just like it to be there. A nice, safe and easy place.

well put. they would rather trade on the fat body of the candle right in the middle. i call them the losing candle belts of orion. but they wouldnt understand that. im starting to see that everyone sharing winning strategies us stupid. do u show your cards at poker. why show the truth when i would stab you in your eye to gain a tick and thats in the micro. i come here to watch the pain i cause when there fat gaussian trades roll down the tail into my mouth full of money!

 

[REDP1800]

i

well put. they would rather trade on the fat body of the candle right in the middle. i call them the losing candle belts of orion. but they wouldnt understand that. im starting to see that everyone sharing winning strategies us stupid. do u show your cards at poker. why show the truth when i would stab you in your eye to gain a tick and thats in the micro. i come here to watch the pain i cause when there fat gaussian trades roll down the tail into my mouth full of money!

m done being mr. nice guy. your orders are the titanic and im the iceberg. aggressive mkt orders just like the hft lets my wife shop at tiffany

 

[REDP1800]

I mentioned adding to winners which is just as important as adding to losers. Once you get to a certain level as far as cars are concerned and you have very low rates even without a membership or seat lease which easily done with negotiation and lots of volume you come to find that cutting losses will cost way more than averaging down due to slippage. but yeah.. I am apparently suppossed to show a log of my trades and my statements in order to prove what? when you start growing which I hope people do you will start to find out that your strategies just don't produce like they did because of slippage and games being played on you by the algos. Why do you think entire industries are built on position in que and direct market access? slippage is what kills day trading once you get to a certain level. It is just not cost effective to get in and out 20 times aday even with FREE TRADES which doesn't exist. holy crap if someone voicing there opinion answering someone simple question leads to this rabbit hole of buried garbage then my hypothesis about this site is correct. 94,000 losers. of which .000005 % ever stay here longer than a month if they have a brain. I do not after years of watchng charts. the hft has figured out how to use mind control thru the charts. this is true. just like a beating drum it is possible for traders to stare at the screen and get hypnotized. be careful . studies have been done.. take breaks and average down for your health and well being. BUY GOLD BUY OIL BUY STOCKS after the GDP. qtr point cut by the fed next week. full on bullish dow 35,000 by middle of 2020. never stop buying

i must pat myself on the back again!! gold to 2 year highs. only up 100 bucks a contract since it was mentioned. did u buy it! nope cuz your a loser and i love great losers because we need the money. mgi im in at 2.03. yes going to 4 asap. bidu at 500 in 5 years. snap at 90 in 3 years. these are pro plays not for gutless overweight horse betters.

 

[REDP1800]

Enjoy it while you can. I've known of people who do relatively well scalping (according to them...I've never seen audited returns). And I've seen automated programs that do well...until they don't. Once we have a bear market or regime change, their subjective "feel" of the market goes away as volatility, routine patterns, etc are disrupted. That's to be expected. If you could really scalp successfully most days (that's 200+ per year) you'd compound a few thousand into multi-millions quickly....but there are no retail scalpers on the Fortune 500.

Put another way, people who could scalp successfully in 2004 were out of the game by 2008. Those who profited in 2008 were no longer making money by 2012, etc.

you couldnt have said it any better

 

[REDP1800]

Must be their modus operandi. I been scalping since the 1990’s off and on when my career responsibilities afforded me the time..etc. To me it is actually easier today than then. We had no emini’s back then. As long as markets go sideways...up and down..I can scalp them. When they quit doing that then it is over.

ok nostradameus

 

[REDP1800]

On my long term holds, I actually average down all the time and quit putting stops on them. It worked well. The logic: I buy keepers when they are on sale, if they go down further, they are even better bargains. Some examples: GOOGL, MSFT, BRK-B... I can remain irrational longer than Wall Streets can, especially when there is blood in the Streets.

I tried it with short term trades. Did not do that well: GE, TEVA...

My lessons learned: Don't average down in short term trades.

bidu

 

[REDP1800]

Here are some examples of averaging down in MES and the ES this morning within 1st hour of trading.

MES is first chart using various combinations but max average in size was 8 contracts. Gross 108.75


View attachment 206462

ES second chart. Gross before comm 512.50 using 1,2 contracts
View attachment 206463

not bad buying high selling higher. the opposite of the public but at times switching gears quickly n selling highs to those buys and buying lows to sell those i call the losing set.

 

[REDP1800]

I tried: GE, TEVA TSLA, SNAP, KHC and GM (prior to bk).

funny. i bought snap at...16. then 12 then 8 then 6.18 for my largest buy in. i havent sold 1 shaee yet. not even 1 i have thousands. that was the best average down of my life and im a day trader but i got behind snap and my premise my bias my plan and im up huge. holding until 90 in 3 years.