and what have u contributed to this forum besides criticizing ? If you dont have anything worthwhile to say then F#k off.
Tell me why averaging down is a bad idea .
- Thread starter joker542
- Start date
and what have u contributed to this forum besides criticizing ? If you dont have anything worthwhile to say then F#k off.
I admire folks that don't make mistakes because I made lots of them in trading.
I admit I am a loser - of many trades and I remember all the big ones. I have only been trading full time for 10 years, deriving the bulk of my income during these time from trading. Unfortunately that is too short a time frame to say I have any trading skill.
Best of luck to you.
Have nothing to sell LOL. ACTUALLY I was explaining why earlier on that day I identified a channel morphing into a range and a poster could not see what I was seeing. SO....after the day ended I was showing him how it in fact turned out. If you had taken the time to read the other posts you might have understood.
Thanks for taking the time, but I honestly don't see it this way at all. Refer to my notes.
You took the long at A roughly, and I see nothing at this point that says its a range. Yes, I see the one big bull bar that you indicated, but where we are breaking out, I just see that as a reason to short, with perhaps some scaling in. I know you also said before that you thought we were in the middle of the range, but I simply see no way to even guess at the size of this range yet.
Where I mark the letter B, at the double bottom, this is where now we can start to think of this as a range, and the top of the range is quite clear based on the highest high between those two lows.
I really do think you got a bit lucky on those longs. And like I said before, I think the range can only be drawn much later, not the way you actually drew it. Even where I start my bottom like I can't really because I dont know its a range yet until it makes the double bottom at B.
So in my opinion, the only trades were a short at A, and perhaps a long at B, hoping for the double bottom after the break out of the channel and break of the pattern of lower highs and lower lows.
I don't think I addressed this post of yours so here goes.
To me it is significant that where I started drawing the box we had our first sideways action. 15 minutes of it. Bear..bull..bear bars. Then it drops down a little followed by more sideways action. This time 30 minutes or six or so 5 min bars. Then it drops more and we get another 25 minutes of sideways action. These three sideways actions correspond to the three yellow highlighted areas we have been looking at earlier. Below I am showing this again but as boxes (first chart 5 min chart) and not highlighted yellow. Now if we dial down to a 1 minute chart (second chart below) these boxes correspond to the three boxes on the 5 minute chart. They are what I call micro horizontal ranges. All three ranges are in the larger bear channel. But these are indicators that the larger bear channel is morphing into a range even though it still looks like a bear channel.
Three micro horizontal ranges mean the larger bear channel is morphing. So, the top of the larger box is drawn at the first micro horizontal range. The bottom of the larger range box is where the third micro channel box is. We know that this is a logical place for the bottom of bigger range box because bull bars are breaking out of the third micro range. These three micro ranges mean that in this area the bulls and bears are pretty much equal in pressures. Of course these micro ranges will have BO's too.
Maybe this explains the points I picked to start drawing my larger range that still appeared to be a channel and why further on where I took my trades at what appeared to be at the top of the channel yet in the middle of the larger range box, because the channel was morphing.
Sometimes dialing down into smaller or dialing up into larger TF helps one "see" a little better what is going on with PA. These transitions from one phase to the next are important to see because that is where my tactics change. I don't usually have to dial down to see this stuff but it can be useful to help identify the possible beginnings of new market phases on a 5 minute chart.
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You see AFTER the fact the range can be seen clearly. That agree with you. But after the fact it becomes clear the latter part of the bear channel actually has become a part of the range. The whole point I am trying to make is that for me it is important that I get early detection of a market changing phases before it becomes obvious. Why? Because it affects what tactics I will use in my trading. By dialing down to 1 minute I can see 3 sideways price actions. So I can draw a potential horizontal range box and start counting bars. I want to see 15 to 20 bars in this transition before I am willing to change tactics from channel trading to range trading. So I draw the box. Starting at the beginning of the box i count 20 bars over and arrive at the largest bull bar in over 40 bars (i think). We are in the middle of my box. I am taking a long trade betting price will get to the top of my range box where I can exit with a profit and then short for the move down. That is all I am saying.
See it is important to start using range tactics as soon as possible in a transition phase because one never knows how many trades he can get in before there is a successful BO of the range once you get 40 bars or more in a range the BO direction is 50/50. But the larger context needs to be taken into account also.
As in this case the range continued basically all the session practically. But I nail the transition period when it looked like a channel and was able to get an early range trade in.
It is all about anticipation. I am a scalper. Scalpers want lots of trades.
So I went long to top of range. Then two bars later shorted near the top for a second trade. There was no luck to it. I purposely trade from the middle of the range to the top. Then shorted near the top for another trade. I don’t always take a long or short trade from the middle of a range but I will using certain tactics if the immediate context supports it and it did in this case with that larger bull bar in over 40 bars if I am not mistaken (Don’t feel like counting them again Lol)
This is alot of work explaining why I took that trade. I was not breaking any rules. I was capitalizing on a certain context. There are many tactics to trade in ranges. Previous to this I think I had only discussed shorting at the top and going long at bottom so you perhaps thought i was not trading my setups.
Look if a range is broad enough I will trade by bar counting. Wedge tops and bottoms. Expanding triangles. Trend reversals. BO’s. All those things can happen WITHIN a range and I trade them differently. It ain’t just shorting at the top and going long at the bottom.
I can’t spend no more time explaining the details of the trade in question. For me it made perfect sense to take it and I did. And that is that!
I am just showing some tactics I use. There are many more I have not yet detailed out on ET. Again I have no secrets. Nothing to hide. And I am not afraid of sharing how I trade. I have no fear of it becoming outdated and not working if too many people do it. Actually, the more that do the more accurate it will probably become. So I AM NOT WORRIED ABOUT SHARING ANYTHING. It is just alot of work doing so.
See it is important to start using range tactics as soon as possible in a transition phase because one never knows how many trades he can get in before there is a successful BO of the range once you get 40 bars or more in a range the BO direction is 50/50. But the larger context needs to be taken into account also.
As in this case the range continued basically all the session practically. But I nail the transition period when it looked like a channel and was able to get an early range trade in.
It is all about anticipation. I am a scalper. Scalpers want lots of trades.
So I went long to top of range. Then two bars later shorted near the top for a second trade. There was no luck to it. I purposely trade from the middle of the range to the top. Then shorted near the top for another trade. I don’t always take a long or short trade from the middle of a range but I will using certain tactics if the immediate context supports it and it did in this case with that larger bull bar in over 40 bars if I am not mistaken (Don’t feel like counting them again Lol)
This is alot of work explaining why I took that trade. I was not breaking any rules. I was capitalizing on a certain context. There are many tactics to trade in ranges. Previous to this I think I had only discussed shorting at the top and going long at bottom so you perhaps thought i was not trading my setups.
Look if a range is broad enough I will trade by bar counting. Wedge tops and bottoms. Expanding triangles. Trend reversals. BO’s. All those things can happen WITHIN a range and I trade them differently. It ain’t just shorting at the top and going long at the bottom.
I can’t spend no more time explaining the details of the trade in question. For me it made perfect sense to take it and I did. And that is that!
I am just showing some tactics I use. There are many more I have not yet detailed out on ET. Again I have no secrets. Nothing to hide. And I am not afraid of sharing how I trade. I have no fear of it becoming outdated and not working if too many people do it. Actually, the more that do the more accurate it will probably become. So I AM NOT WORRIED ABOUT SHARING ANYTHING. It is just alot of work doing so.
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You have to look at your trading record when it comes to deciding if scaling is appropriate.
I can't speak for everyone, but my experience has been that my best trades tend to go in my favor as soon as I enter them. Looking at my trading history, It is rare that I'll have a trade that nearly stops me out and then ends up being a homerun trade with a great risk to reward ratio.
So by scaling in as the trade moves against you, you are essentially increasing your position size on weak setups while likely having your smallest position on in your best trades.
Something to consider - rather than building upon a strategy that counts on a trade moving against you to position into it, why not work on improving entries?
I can't speak for everyone, but my experience has been that my best trades tend to go in my favor as soon as I enter them. Looking at my trading history, It is rare that I'll have a trade that nearly stops me out and then ends up being a homerun trade with a great risk to reward ratio.
So by scaling in as the trade moves against you, you are essentially increasing your position size on weak setups while likely having your smallest position on in your best trades.
Something to consider - rather than building upon a strategy that counts on a trade moving against you to position into it, why not work on improving entries?
you have never traded size and that it s obvious because it is about getting filled a tick b4 others or the trade doesnt work. when trading size you dont want too many people in the same area doing the same thing. 1. your box method is discretionary and uses lots of hindsight. 2. if u had a winning system u wouldnt share unless your ego needed stroking from elite trader? sad. but ur making 200 bucks. i mean big whoop. mkt moved in a 3500 dollar range n u made 200 dollars and ur acting like warren buffet holy grail..lol
What you say is good advice. However, in today’s world full of HFT’s and algo’s that can jerk the market around in seconds its like putting a worm on a fishing hook to improve entries for a MANUAL scalper like myself. I’m too old to learn programming and automation. So I have to adapt my manual scalping and wring out techniques that work for me in a world of trading that is dominated by computers. I have to devise methods that give me high win rates. That is the most important metric ...by far...for a scalper (i consider scalping to be 1 to 8 points in the ES index). With 1 point being the min scalp.
This said, averaging down to scalp works for me because the technique actually INCREASES the probabilities the trade will be successful. It does not decrease the probabilities. And it allows me to make multiple entries in a market that is being jerked around the way a cat jerks around a mouse. And on those subsequent entries I add to my position getting better price. That is, I am getting a cheaper price on the subsequent entries than my original entry. I am leveraging price action to my advantage by averaging down.
In a jerked around environment I am betting that if I take a position and seconds later it gets jerked against me and I add to it (in the adverse jerk) then I am betting it will be jerked right back within minutes or seconds in my favor. So basically by averaging down in manual scalping I am capitalizing on JERKS... (Pun intended)
Nevertheless, in the end, in spite of all the jerking, the PA, in markets always form the classic patterns. Patterns such as trends in the forms of BO’s and channels, ranges, flags, wedges, triangles, megaphone or expanding triangles, H1’s H2’s..L1’s..L2’s ...ad nauseam..
So if I am going to scalp and do so within the classic patterns that PA forms I must decide which classic patterns lend them self to averaging down techniques. And I have to look at, and take into account, the larger context to assess probabilities that averaging down won’t produce successive massive losses.
For instance, as I scalp a bear channel. Larger context: gap down opening followed by .... Lower lower lows..lower high’s that form a fairly steep channel. What is my best scalping technique, long or short? Because markets have inertia it is best to take trades that are in the direction of the inertia. In this case that will be short entries. It doesn’t mean I can’t take long entries in a bear channel but if I do I best make it small scalps and not follow profit movements too far but grab it when I can. Because inertia is against long trades in the case. So, it is a shorting environment. But where are my entries? When would I average down? What patterns do I look for in the bear channel? Let me give an example. Since inertia is down.
I will miss alot of trades if I wait and only short when price reaches the top of the channel. So, because of inertia being down if I see a nested wedge top (within the channel) and the top of the wedge is in the middle of the channel I will short that top and add to my losing position IF price trades on up toward the channel top. Why not just wait until it reaches the top of the channel and then take a full position? Well because I will miss out on many trades and a scalper makes money by taking many trades. Context is down. It is a bear channel bear. Weakness is evident. Price often will trade up to middle of the channel or just above the middle then reverse. I miss that trade if I wait for price to get to the top of the channel. As a scalper I want to capitalize on as MANY trades as I can. Making a short entry on a nested wedge top that appears in the middle a larger bear channel is a high probability trade that averaging down won’t hurt hurt me but actually help me by giving me more trades and doing so in an environment that increases the probabilities that the trade will end up being successful, See, the odds are favoring lower lows and lower highs and PA continuing as a channel.
So, I want to capitalize on two things:
1) More trades opportunities (I am a scalper)
2) ways to increase the probability the trade will be a successful trade.
I have accomplished that in the scenario described above averaging down in a select environment.
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