The DOW looks poised to drop momentarily, and the rest of the market with it. (Image)

[padutrader]

Most BO or reversal attempts fail

i would say all of them eventually fail.....but you cannot catch the top or bottom so it is just like most of the other rubbish that gets tossed around for eg it is just supply and demand ...
unless you can measure exactly the supply as compared to demand or measure exactly where a BO will fail,it is a shot in the dark
As Seykota said..'if you cannot measure it you cannot manage it' and trading is about management

 

[volpri]

Very long but very readable. This makes sense. Thx.

Ok hope it clarifies. One other thing I probably need to say is that a reversal at the top of a range is a successful reversal in terms of getting to the bottom of the range but it fails at that point. That said, maybe I won’t confuse folks by what I am about to say now.

In a range I like to fade BO’s and bet on the reversal. Bet on the reversal until it gets near to the other side of the range then I will fade that reversal and the subsequent BO attempt and bet on a new reversal up towards the top of the range. Then of course, I will fade that reversal at the top and it’s subsequent BO attempt and short betting on a new reversal going back down.

 

[Overnight]

...
In a range I like to fade BO’s and bet on the reversal. Bet on the reversal until it gets near to the other side of the range then I will fade that reversal and the subsequent BO attempt and bet on a new reversal up towards the top of the range. Then of course, I will fade that reversal at the top and it’s subsequent BO attempt and short betting on a new reversal going back down.

Well, yeah, you're just (successfully) trading within a range-bound channel. That will work until it doesn't, too?

 

[volpri]

i would say all of them eventually fail.....but you cannot catch the top or bottom so it is just like most of the other rubbish that gets tossed around for eg it is just supply and demand ...
unless you can measure exactly the supply as compared to demand or measure exactly where a BO will fail,it is a shot in the dark
As Seykota said..'if you cannot measure it you cannot manage it' and trading is about management

I beg to differ. There are successful BO’s and successful reversals. And when you see one there will most likely be at least 2 legs in the direction of the successful BO or reversal. And MM’s enter the picture at that point. Now you do have to define what you mean by successful. To measure it...well you can if you draw a box around a range then it can be measured.

As far as measuring it exactly well it is a sort of shot in the dark but that is what averaging down is for...ROFLMAO another rule breaker the guru’s detest to my delight. I not only am a risk taker I am a maverick, but logical, risk taker. I have a propensity for breaking the rules that the gurus develop. In ranges I will average in more often than not. That is I add to a position as it goes against me because I cannot predict if the top will end up being just below the top of the range, just through it or where. Averaging in (aka as averaging down or some call it scaling in so they can say they ain’t breaking the rules LOL...I just get a kick out of this..all semantics...) settles that problem for me. Whatever you want to call it I don’t care. It IS averaging down into a losing position. A trader just has to know when to employ it and when to let it go. And what to do if doesn’t work out.

 

[volpri]

Well, yeah, you're just (successfully) trading within a range-bound channel. That will work until it doesn't, too?

Exactly. At some point it WILL fail. What I do at that point is of paramount importance.

 

[Overnight]

...Whatever you want to call it I don’t care. It IS averaging down into a losing position. A trader just has to know when to employ it and when to let it go. And what to do if doesn’t work out.

What it does in essence is compound a problem trade. You really need a lot of damned money to average down into a losing futures position and expect it come into profit. Going long in Oct last year did not bear itself well for averaging-downers.

 

[volpri]

What it does in essence is compound a problem trade. You really need a lot of damned money to average down into a losing futures position and expect it come into profit. Going long in Oct last year did not bear itself well for averaging-downers.

ON remember I am talking about averaging down in intraday trading. Not overnight or weekly or monthly. While it can be done too it does require more money and has more risk.

 

[Overnight]

ON remember I am talking about averaging down in intraday trading. Not overnight or weekly or monthly. While it can be done too it does require more money and has more risk.

Ug, that's even worse! Average in on a busted BO to the long side, finish the day with a cratering market, and your day "and career" can be wiped out.

There's a reason I did not average into my latest MNQ long on May 16th, as the market kept tanking. I played it like I was in the mini. Averaging in would have eventually worked, but were it a mini, I would have wiped myself out. Averaging in is a bad idea in my mind. Best way to approach it is try to average in across multiple months. That is a hackneyed weay of doing it, and it worked for me in CL. But with only 2 months of equity index, I am scared of it, at the moment. I'm stil waiting for the 50%+ market crash everyone says will happen, like tomorrow.

 

[volpri]

Ug, that's even worse! Average in on a busted BO to the long side, finish the day with a cratering market, and your day "and career" can be wiped out.

No no no you don’t do that. Instead you go long averaging in at the bottom of the range betting the BO south will fail and a reversal to top of the range will be successful. You do not average in long on a BO at the top of a range. That is for averaging in shorts.

 

[Overnight]

No no no you don’t do that. Instead you go long averaging in at the bottom of the range betting the BO south will fail and a reversal to top of the range will be successful. You do not average in long on a BO at the top of a range. That is for averaging in shorts.

Right, that is what I meant. You keep averaging down in a range, and when the market breaks to the downside, yer screwed.