Tell me why averaging down is a bad idea .

[volpri]

So HOW do you know that this time this market "inertia" will pull it back and continue its original trend and not reverse the trend to go in the other direction?

"Of course, my illustrations are hindsight. For the most part."

If your illustration is all based on hindsight then it's not worth much. Everybody is a genius in hindsight. Past performance is not indicative of future performances. Just because the market pulled back several times before continuing on a huge trend doesn't mean the next time that it will pull back the next time. And the past few "average down" that you did could've landed you in a margin call way before the market finally reverses and continues its original trend. What then?

Key to successful trading is not being right. It's having enough money to cash in on being right. Once you've made enough losses, you will realize this.

Could have ….could have...could have. Lots of things could have. I don't run my life on could haves. I make judgements. Make a decision. Execute a trade. Have contingencies in place if my judgement is off and presto I am trading and not sitting on my ass wringing my hands worried about "could haves."

WRONG. The key to successful trading IS BEING RIGHT. You can't be successful and be wrong all the time. You gotta be right more than wrong or your gonna sit on the rear portion of the body waiting..and waiting..hoping..hoping..hoping..sweating..sweating..sweating...wringing hand..wringing hands...just sitting for price to move in your favor. While a nimble trader will be in and out 100's or thousands of times while a "sitter" with tremblings hands under his ass is waiting for his paltry profit over 2 or 3 months to finally appear on his two contract position that he has already received margin calls to maintain it.

NOTHING BEATS WINNING OVER THE LONG HAUL.

Maybe one day YOU will realize this.

As far as inertia. How do I know gravity will pull me down if I jump up 3 feet?

There are exceptions since the market isn't exactly a law but MOST of the time the market WILL keep doing what it is doing until the pressures mount and drive it in another direction. And that doesn't usually happen on a dime. There are signs. Usually the market keeps doing what it is doing (range..bull trend..bear trend) until some side wins that changes its behaviour. Which side won after Mr Powells little speech? Those changes happen when force is exerted and pressures move the market. Those pressure are either the bears or the bulls. One gets the upper hand for abit anyways. If a trader knows how to detect and read the pressures the signs are there of an impending change about to happen. It will all show up in the chart. After Mr P's little chat which side you gonna be on after support breaks hard and fast? Who is winning now? Who was winning prior to his yapping? Which side were you on then? Which side you on after the speech? I was on the bull side before the Mr P's chat took my trades and went to eat breakfast. I took my long position average in and took my profits when the market handed them to me on a silver platter.

Did you trade?

Sincerely
Volpri

 

[volpri]

Yes but the market changes. It's dynamic. It could exhibit one type of market structure for many years and all of sudden it would change for one year and you won't know it until after the fact. That's the problem.

ROFLMAO It is not a problem for me. You talking years! I am a scalper. I talk seconds and minutes. I care less about years ago. Means absolutely zilch to me. I barely care about yesterday.

 

[volpri]

I do completely agree with you. I see it with my trades all the time and how many of them would benefit from a scale-in versus a stop-out. My trades are also not nearly as well thought out as you.

The benefits of this really come into play with the micro contracts. Assume you used to trade the ES and use a 2 point stop, so you have $100 on the line. Now with the mES, you can scale into your position. You can still use a $100 stop, but if you structure it so that you enter 2 micro contracts at one level, and then 2 points away add around 2 when it goes against you, instead of taking the stop-out, you will actually much more often end up with a profit.

Also, what I see over and over again, is that once price takes off in a direction you expected, it often means that you're not getting a good price. Say you wanted in at 2900, but all you can get now is 2902. Well, price can very well test 2900 again, or even dip down to 2899, a whole 3 points away, and this still wouldn't be considered a broke level, just a poke. So if you know that you will start with 2 micro contracts at 2902 and not sweat it it goes against you, because you will buy more at an even better price, psychologically, this will be very beneficial.

The key really is having a stop. So spreading out your entries and having a stop is much easier to accomplish than trying to precision enter the trade. From all the trades posted, I can say 90% of entries would benefit from a scale-in at a better price if your position size allows for multiple contracts, which is easy to do with the micros.

BINGO!
With ES I like to start with 1 or 2 contracts and add up to around 10 if I am feeling frisky that day. With MES I like to start with two but sometimes will start with 1. Next level I may add 2 or more or even 4. Third level get it up to 6 to 8. Usually by then if I am right price is starting my way. However, if goes against me a little more I will bump it up to 10 contracts which is like 1 ES. I have my stop in place. More important than the stop I have a contingency plan on what I will do IF my judgement or read is totally wrong and price continues down. Bottom line I know where I will bite the bullet and I know what I have in mind to get that loss back. I ain't sitting there rattled after a loss, throwing coffee cups at the monitor. OOPS I don't use a desktop. Just a little laptop and IPAD for trading. That way my wifey can be driving down the interstate 70 MPH and I can be scalping. Next stop.... seafood place.

Psychologically there is no substitute to winning. Averaging down lets me turn a losing trade into a winner. But I NEVER advocate averaging in down in just any and all circumstances. If a body doesn't know "how" and "when" to attempt it they will get burn't. You gotta to know how to detect who is winning..where the pressure is building..where you are in the immediate price pattern...where you are in the larger context...and the probabilities that it will go in your favor. So you need a favorable traders equation, to quote Mr Brooks. There are 3 elements to consider in any trade. Two you can control. Your SL and your PT. The third is probability. You cannot control that. But based upon inertia...price pressure...bulls and bears actions...context...you can make an estimated guess about the trade going in your favor towards your Profit Target before it would go against you and hit your SL. What are those probabilities? Yes, it is your best guess. But if you are skillful in reading pressures...context..patterns..you can actually get pretty good at it instead of wringing hands sweating and hoping to get your R:R ratio right. Every body pushes that damn R:R ratio. Another myth. Way more important is ability to read the market instead of just place trades with a good R:R ratio. Skillfully reading the pressures in itself drastically reduces the RISK factor even if you have placed an actual SL. I try to always place an immediate hard SL at my "get out point" It is bracket in. If my wife runs under a bridge on interstate and I lose signal I'm ok. I am protected.

The market is dynamic and I will make adjustments as a trade is unfolding but is paramount I enter the trade with at least a good idea of the probability of it turning out successfully.

Lastly, it is important to have a contingency plan in place. Why? because usually the probability element is gonna be 60% chance it will go in my favor before it hit my stop. In some scenarios it can go up to 70%. On rare occasions probabilities can hit 90%. Since is IS the variable in the equation I have to have a contingency plan.

 

[volpri]

I gotta go run. Still working in the house remodeling. I don't know if I will get a chance to trade any more today and don't really care. But some of you might want to read my posts and shall I say "think" about it what the posts are saying, at least, at the very least contemplate the ideas. If you just can't see it wad em up and throw them in the trash can. While the garbage man picks them up I will be trading them. Have a great day!

 

[volpri]

Jsop, Mickey, and Overnight,

You guys are trend traders..( I think). Maybe sipping on coffee with trembling hands LOL. Just joking guys.

So what would you guys do? Your trend traders right? Should be easy right? So...long or short and why?

 

[JSOP]

ROFLMAO It is not a problem for me. You talking years! I am a scalper. I talk seconds and minutes. I care less about years ago. Means absolutely zilch to me. I barely care about yesterday.

Minutes ago, same thing. It's just tf difference.

 

[volpri]

Minutes ago, same thing. It's just tf difference.

Well it may make a difference in drawdown, perhaps sleepless night..trembling coffee cup hands... emotional toll on roller coaster rides,,,etc. Have I missed anything? Oh yea the constant harrassment by the wifey who waiting for the jackpot to make a run to Dillards.

I had a friend who I taught scalping to. To both him and his wife. Both he and his wife did really well within days pumping out the profits. But then he decided too much screen time so he started doing mutual funds. Apparently got hammered. Last time I talked to him a few years later he said he was DONE with the markets.

But you gonna do whatever floats your boat so sail on. But first “the chart” before you leave port heading into the storm from which you have a high possibility of not returning from safely. Should be easy for you since TF’s mean nothing to you. Will kindly await your answer. Long or short and why?

 

[JSOP]

Could have ….could have...could have. Lots of things could have. I don't run my life on could haves. I make judgements. Make a decision. Execute a trade. Have contingencies in place if my judgement is off and presto I am trading and not sitting on my ass wringing my hands worried about "could haves."

WRONG. The key to successful trading IS BEING RIGHT. You can't be successful and be wrong all the time. You gotta be right more than wrong or your gonna sit on the rear portion of the body waiting..and waiting..hoping..hoping..hoping..sweating..sweating..sweating...wringing hand..wringing hands...just sitting for price to move in your favor. While a nimble trader will be in and out 100's or thousands of times while a "sitter" with tremblings hands under his ass is waiting for his paltry profit over 2 or 3 months to finally appear on his two contract position that he has already received margin calls to maintain it.

NOTHING BEATS WINNING OVER THE LONG HAUL.

Maybe one day YOU will realize this.

As far as inertia. How do I know gravity will pull me down if I jump up 3 feet?

There are exceptions since the market isn't exactly a law but MOST of the time the market WILL keep doing what it is doing until the pressures mount and drive it in another direction. And that doesn't usually happen on a dime. There are signs. Usually the market keeps doing what it is doing (range..bull trend..bear trend) until some side wins that changes its behaviour. Which side won after Mr Powells little speech? Those changes happen when force is exerted and pressures move the market. Those pressure are either the bears or the bulls. One gets the upper hand for abit anyways. If a trader knows how to detect and read the pressures the signs are there of an impending change about to happen. It will all show up in the chart. After Mr P's little chat which side you gonna be on after support breaks hard and fast? Who is winning now? Who was winning prior to his yapping? Which side were you on then? Which side you on after the speech? I was on the bull side before the Mr P's chat took my trades and went to eat breakfast. I took my long position average in and took my profits when the market handed them to me on a silver platter.

Did you trade?

Sincerely
Volpri

What's your contingencies, pray tell, to deal with all the losses from the pile of average down's that you have done with the market not reversing? Margin calls? That's not contingencies btw. That's the last desperate efforts by the brokers to save their own a$$. I hope you understand this. But then again, why do you need contingencies? That's for dealing with "could've"'s which you don't believe in. So why have contingencies, when you are having losses, just average down more with all of your savings. That way when the market reverses after you get margin called, you will win big. LOL

 

[JSOP]

Jsop, Mickey, and Overnight,

You guys are trend traders..( I think). Maybe sipping on coffee with trembling hands LOL. Just joking guys.

So what would you guys do? Your trend traders right? Should be easy right? So...long or short and why?

View attachment 207644

Where is the rest of the chart? I need the complete chart to speak from hindsight like you cuz I don't believe in "could've"'s either. I need to see what "have" happened so I can illustrate the perfect, precise trade. What's with this "what would you guys do"? It should be "what would you guys have done"? LOL

 

[volpri]

Where is the rest of the chart? I need the complete chart to speak from hindsight like you cuz I don't believe in "could've"'s either. I need to see what "have" happened so I can illustrate the perfect, precise trade. What's with this "what would you guys do"? It should be "what would you guys have done"? LOL

Making it present tense for you. This is what you see on your chart. It can be monthly..weekly..daily...1 hour...5 min...1 min. You are live. Make it yearly if you like. What will you do? Long or short?