The Mental Game of Trading and Power vs Force

[Sekiyo]

There’s nothing wrong about averaging down.
As long as risk is kept in check.

You can buy 1 at 10 and risk 5 pts
You can buy 1 at 8 and risk 2.5 pts

Average is 2 @ 9, Stop is 6.5

You can buy 1 at 9 and risk 1.67 pts

Average is 3 @ 9, Stop is 7.33

Only 1 lot traders think it’s evil to average down,
It’s actually called building up a position.
Has nothing to do with risk mngmt.

Only loser average loser.
Dude … You ain’t losing.
Otherwise you’d be out.

The best trade show profit right from the start,
But it’s fine to average down within a certain limit.

If you trade 10,000 ES per day,
You won’t get filled with 1 tick
Might take several points,
Up or down.

 

[SimpleMeLike]

There’s nothing wrong about averaging down.
As long as risk is kept in check.

You can buy 1 at 10 and risk 5 pts
You can buy 1 at 8 and risk 2.5 pts

Average is 2 @ 9, Stop is 6.5

You can buy 1 at 9 and risk 1.67 pts

Average is 3 @ 9, Stop is 7.33

Only 1 lot traders think it’s evil to average down,
It’s actually called building up a position.
Has nothing to do with risk mngmt.

Only loser average loser.
Dude … You ain’t losing.
Otherwise you’d be out.

The best trade show profit right from the start,
But it’s fine to average down within a certain limit.

If you trade 10,000 ES per day,
You won’t get filled with 1 tick
Might take several points,
Up or down.

Hello Sekiyo,

"I see, better than hear"

 

[volpri]

Hello volpri,

I tried scaling in price action scalp trading for about 4 months, and I failed miserably and lost alot of real money doing it. I know you and Al Brooks like that style of trading, but it did not work well for me. I do not like how Al Brooks does all this talking/teaching and can not prove anything. He sell people dreams. I am not sure why you and Al Brooks do not trade live and show traders how you trade since you like scaling into losing trades so much. Makes no sense to me at all. I will never talk/teach about something and do not prove it to traders with real money. That does not seem fair to me.

I stated in my example, after holding XX contracts and you have to take that big loss, you will not be able to recover by scalp trading.

Averaging into losing trades is just a mental way to make trader feel good day to day, by winning. Eventually the big loss comes, and trader will give up cause they know they will never be able get that big loss back.

I need a $1,000,000 trading ES account to make it work. and $5 million in savings and all bills and debt paid

And I do not have a $6,000,000 trading account.

I will stick to setting my stop loss, and setting my profit target per trade.

I have much respect for @Overnight for keeping his live trading journal win or lose. Thank you.

That is good you respect overnight. Have you learned anything from him that is useful in your trading?

 

[volpri]

If you research it out I think that you will find quite a few professional traders average down. As alluded to by Sekiyo it is their “modus operandi” for building their position. Some traders scale in adding to their position as price moves in their favor. That too can work but can also create a bigger loss if price suddenly reverses. Unless they have a protective exit order at BE or just above it. If they don’t and price dips below their original entry then their scaling in order begins to compound the loss quite quickly.

Dollar cost averaging that some investors practice can be a type of averaging down if they are doing it on say a long position as price moves down. It has the effect of lowering their average purchase price and at the same time the amount favorable movement needed to get them in profit. Martingale tactics accelerates that even more but can also create bigger losses if wrong.

Remember when I speak of averaging down I am speaking in terms of scalping 1 to 8 points in ES and it lasts only seconds or a few minutes at most. And on 1m to 5m minute charts. I am never talking about holding an averaged down position overnight. And rarely ever even 1 hour. Most of the time it is 1 to 5 bars or so on 1m to 5m TF’s and the thing is over. It is jumping in. Adding quickly. Jumping out. On every bar the market is probing. It is taking advantage of this probing that takes place as bullish and bearish pressures are exerting their forces on the market.

 

[SimpleMeLike]

As with anything you have to know “when” to scale in. Not every trade is conducive to scaling into a losing position. Sometimes it is best to take the SL and even exit before the SL is hit. A trader has to really learn how the market probes back and forth, see that happening, and know how to capitalize on it by scaling into a losing position. Scaling in is not to make one feel better but it is used to increase probability of exiting a trade with profit. However, any time probability is increased usually risk is increased and reward is decreased. But not always. Sometimes by scaling in probabilty is increased, risk is increased, and reward increased dramatically on a subsequent further than expected favorable move after scaling in.

If it were not working for me then it would be best to quit doing it or practice more a sim until I felt confident I could do it successfully.

Good Morning Volpri,

Thanks for the response

 

[SimpleMeLike]

If you research it out I think that you will find quite a few professional traders average down. As alluded to by Sekiyo it is their “modus operandi” for building their position. Some traders scale in adding to their position as price moves in their favor. That too can work but can also create a bigger loss if price suddenly reverses. Unless they have a protective exit order at BE or just above it. If they don’t and price dips below their original entry then their scaling in order begins to compound the loss quite quickly.

Dollar cost averaging that some investors practice can be a type of averaging down if they are doing it on say a long position as price moves down. It has the effect of lowering their average purchase price and at the same time the amount favorable movement needed to get them in profit. Martingale tactics accelerates that even more but can also create bigger losses if wrong.

Remember when I speak of averaging down I am speaking in terms of scalping 1 to 8 points in ES and it lasts only seconds or a few minutes at most. And on 1m to 5m minute charts. I am never talking about holding an averaged down position overnight. And rarely ever even 1 hour. Most of the time it is 1 to 5 bars or so on 1m to 5m TF’s and the thing is over. It is jumping in. Adding quickly. Jumping out. On every bar the market is probing. It is taking advantage of this probing that takes place as bullish and bearish pressures are exerting their forces on the market.

Good Morning volpri,

Thank you for responding.

 

[SimpleMeLike]

That is good you respect overnight. Have you learned anything from him that is useful in your trading?

Good Morning volpri,

Thank you for responding with your time and effort and patience.

Yes, I definitely learned ALOT from @Overnight thread that helps me in my trading and thinking. Overnight is a good trader.

Also, I definitely learned ALOT from your thread as well that helps me in my trading and thinking. You are a good trader.

The ONE and only thing I learned from you and @Overnight is:

1. If I can not recover from a trading loss, I ain't worth shit as trader, not even a penny with a hole in it. This my current trading challenege

@volpri please trust everything I say sir, I have tried your method of scalp scaling into loser and yes, it works. And perhaps I gave up a bit too soon, or need more practice or had bad trade management or stayed in a losing position too long, but man recovering that damn big loss is tuff man when you holding about 10ES contracts, and you hoping price returns upwards and get you out with a breakeven or small win. I get everything you said, I do man. The fact remains, the scalp scaling in ONLY works, if the trader can recover the losses. High probability trades will still have those losses.

For my trading journey, this is the part of the process I am in now, drawdown recovery from a loss. So I have to get better with this, and that take more time and chart reading ability or skill, or whatever.

I will try it again in SIM for about 1 hour a day and see how it goes.

The one thing I agree with what Al Brooks says is "Trading takes a long time to be good" "There are no perfect setups".

 

[SimpleMeLike]

Remember when I speak of averaging down I am speaking in terms of scalping 1 to 8 points in ES

Good Morning volpri,
Thanks for responding.

Please clarify:

1. Are stating that when I scalp trade the ES, there are times I need to take 1 point up to 8 points depending on context and flow of the current price action?

2. When you are scaling in (or averaging in) on a loser, do you some times hold the trade for +1 points to make alot of money to recover a previous big loss?

When I was scalp trading the ES averaging in, I was only aiming at 1 point for all trades, including when I was averaging in holding about 15 ES contract.

Perhaps on certain situations I should have been holding for more points? What do you say here?

 

[SimpleMeLike]

Good Morning volpri,
Thanks for responding.

Please clarify:

1. Are stating that when I scalp trade the ES, there are times I need to take 1 point up to 8 points depending on context and flow of the current price action?

2. When you are scaling in (or averaging in) on a loser, do you some times hold the trade for +1 points to make alot of money to recover a previous big loss?

When I was scalp trading the ES averaging in, I was only aiming at 1 point for all trades, including when I was averaging in holding about 15 ES contract.

Perhaps on certain situations I should have been holding for more points? What do you say here?

Hello @volpri

May I please have your response here?

I like at the minute bar to day to see the probing. I see what you mean.