Tell me why averaging down is a bad idea .
- Thread starter joker542
- Start date
Here is how to net over 1000.00 trading the micro ES or MES when price is going sideways. A lot of averaging down and some not. Scalping...scalping..."a bird in the hand is worth two in the bush." We are talking about the tiny MES. I think I traded 148 contracts or 74 RT. All winners I believe. Most trades were 5 contracts or more per entry. I think the most I had averaged down was 15 contracts. I stepped up the size abit here to make more. I did not trade ES ...only the micro ES.
The lessons. Context from open = weakness. Gap down open = weakness. Channel down=weakness I did not trade the channel as I was exhausted from my Honduras trip and slept in late. But I drew the channel in after the fact. Price stayed below both MA's in the channel = weakness. This portion of the phase in this case (the channel) is called a Small Pullback Bear Trend. Great for adding more on PB and holding for bigger moves or scalping by averaging down on each PB’s and exiting over and over after trend continues.
Remember, Channels morph into ranges. I finally got up around 11:00 a.m. Once I saw it had morphed from a bear channel into a range (generally 10 to 15 bars sideways) I applied scalping techniques for the range.
Safer trades are shorts in this range but I did some longs too. Actually may have done more longs? Just didn't follow them far in most cases cases. Greed is a killer.
Remember this range is a sideways motion from a bear channel. On a higher time frame it is a bear flag. So eventual BO of the range ...well odds favor south after range makes 30 to to 40 bars however, it can be in in either direction but because of the larger context it favors a BO of the range south.
The lessons. Context from open = weakness. Gap down open = weakness. Channel down=weakness I did not trade the channel as I was exhausted from my Honduras trip and slept in late. But I drew the channel in after the fact. Price stayed below both MA's in the channel = weakness. This portion of the phase in this case (the channel) is called a Small Pullback Bear Trend. Great for adding more on PB and holding for bigger moves or scalping by averaging down on each PB’s and exiting over and over after trend continues.
Remember, Channels morph into ranges. I finally got up around 11:00 a.m. Once I saw it had morphed from a bear channel into a range (generally 10 to 15 bars sideways) I applied scalping techniques for the range.
Safer trades are shorts in this range but I did some longs too. Actually may have done more longs? Just didn't follow them far in most cases cases. Greed is a killer.
Remember this range is a sideways motion from a bear channel. On a higher time frame it is a bear flag. So eventual BO of the range ...well odds favor south after range makes 30 to to 40 bars however, it can be in in either direction but because of the larger context it favors a BO of the range south.
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Mr T’s Tweets don’t affect me or my trading. Whatever price is doing I scalp with techniques (tactics) designed to use in whatever PA phase the market is in. That is one of the benefits of scalping. I can change tactics on a dime. Whereas if swing trading MR T’s tweets might mess up my long term plan. LOL
but i always wonder why people show what they do when no one showed them. only so many contracts to go around!!
volpri, occasionally someone will say that scalping used to be a lot easier.
At least half the time this comment comes from a former floor trader, possibly not letting on to how easy it may have been for any floor trader to scalp, thanks to the information advantage on the floor.
Since you've been scalping quite a while, do think it's become more difficult ?
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You're always saying that most breakout fail, and yet, here you go long after price is breaking out of bear channel. It seems like you did the exact opposite of what you always say to do. Now don't get me wrong, at least you are showing how you're trading this, that is even more important than the words, but it still seems to go against everything you always say.
I don’t think you understand what I am doing. Most BO’s of channels fail. But all channels morph into ranges. Once a range is identified (and usually the last part of the channel becomes part of the range) then tactics change. The entire gray box is a range. So, if you are talking about the first trades I show ...well I am going long from the middle of the gray range and the top of the bear channel. The range actually began 19 bars back from my entry bar while price was still in a bear channel. But it can only be identified as a range when there are 15 to 20 bars in sideways action. The latter part of the channel actually forms part of the range. So, by the time PA got to my entry bar it was at the top of the bear channel and breaking out of that channel but ALSO AT THE SAME TIME IN THE MIDDLE OF the range. So why did I go long?
Well, by the time of my entry bar a range had been identified. The price action thus needed range techniques not channel techniques because the channel in effect ended 19 bars back even though I show it extended into the range. Prior to my entry bar we had a good size bull bar. So, price breaking out of the top of the extended change but at the same time in the middle of the sideways range and in addition a prior bar (to my entry bar) being a bull bar.
Therefore, the technique is TO BET that price is going to head up to the top of the range. I am betting it will be vacuumed or sucked up to the top of the gray range. So, I am willing to go long in the middle of the gray range. Mostly because of that previous bull bar. But also three bars back from my entry bar we have a bull bar at the bottom of the gray range followed by a bear bar (which was an attempt to push price back down), but that attempt failed because the bear bar is followed by the larger bull bar that takes price up to the middle of the range. So, I am betting that price will make it up to or close to the top of the gray range.
This is a technique of range trading that I have not yet discussed. Maybe this explanation will help clarify and also answer your doubts.
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Not really more difficult but requires more techniques or tactics I suppose because of HFT’s and algos. I used to scalp all day long using one technique.
I understand your explanation, and it clearly worked out for you, but I just don't think that at the point of your first long entry, you can say that there is a range.
If I use your chart, chop off everything but the long entries, and then highlight the series of lower high and lower lows, its fairly clear to me that there is no range. The way your draw your rectangle you could almost draw anywhere higher up
Now don't get me wrong, the trade worked out and this is all that matters, but at the point of entry for the longs, I just don't think you can call it a range, nor would you assume this is where it will break out of the bear channel.