"The only way to trade with Fibonaccis" journal
- Thread starter 1a2b3cppp
- Start date
Quote from 1a2b3cppp:
Here are a few options for an upcoming retracement.
It depends on how aggressive or conservative you want to be.
If there is no retracement and price continues to go up, that is no problem, either. But we will deal with that when it happens.
Or I guess you can combine all of them and have a whole slew of potential fib buy levels.
Yes, worldway does make a good point. Psyhcologically you want to avoid drawdown, but you need it if you want to get a larger position on with this method.
On the hedging aspect I was wondering if it might be better to reduce the size of the hedge as your position goes farther into drawdown. If this method assumes that price is essentially random but that indexes have an upward bias over time, then the risk of further drawdown should get lower as the position goes farther and farther against you. Doesn't the assumed upward bias eventually become more likely to start to assert itself? This wouldn't be the case with individual stocks of course, but we're talking about indexes here. Just a thought I had...
I don't know if I'd trade like this or not, even if I did have a large enough account. But it's an interesting strategy and the way it's carried out does seem to protect you against many of the usual dangers associated with martingaling. Hope you keep at it here because it's an entertaining journal.
On the hedging aspect I was wondering if it might be better to reduce the size of the hedge as your position goes farther into drawdown. If this method assumes that price is essentially random but that indexes have an upward bias over time, then the risk of further drawdown should get lower as the position goes farther and farther against you. Doesn't the assumed upward bias eventually become more likely to start to assert itself? This wouldn't be the case with individual stocks of course, but we're talking about indexes here. Just a thought I had...
I don't know if I'd trade like this or not, even if I did have a large enough account. But it's an interesting strategy and the way it's carried out does seem to protect you against many of the usual dangers associated with martingaling. Hope you keep at it here because it's an entertaining journal.