um there is no way you can ever be long at the bottom of a trend change or the low of the day if you are always averaging down. you understand this is a mathematical impossibility right? in your example here you arbitrarily say..so im long at 55 and the mkt is at 60..so you have a 5 pt cushion. anyone can deal with that im up 250 pretty easy to manage. how about you are long at 57.5 and the mkts at 58 then what?? anyway when you average down you never end up with the low because you cannot it is impossible because you bought above the low already and from your charts you dont pyramid lower at all you are tyoically adding 1 then 1 then 1 vs a pyramid.
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Why trading educators talk about entries 95% of the time?
- Thread starter VEGASDESERT
- Start date
Ok. Here is the general math on an averaged down trade. I believe it to be logical as it renders me a high win rate, which I believe is necessary to successful scalping.Volpri lets be clear here I am not picking on you or trying to discredit your ideas or your experience and observations in with the mkts but I am someone who believes that lots of times out of a challenge or a confrontation comes understanding.
Volpri you said when you do average down you have a mathematical reason so you are admitting there is a system. now how do you exit? do exit them all at once with a small profit quickly almost like a large scalp or are you deploying this mathematical exit strat?
i ask because ive studied over the years lots of average down strategies and typically they have a max loss amount and you never allude to ever being wrong.
you can be wrong on a trade within a trade but your overall trade can be a winner.
it sounds like as much as you say you have a dynamic system you are really saying you use gut ability and your observational experience to make your adds and exits. wouldnt this be the case? also with systems for trading they are dynamic always. its rare any of the systems signals wouldnt involve a form of dynamics in the numbers used to calculate
First, I have a max I will let any trade go against me before I will concede my premise is wrong. This is based on previous price action and is a result of the immediate volatility. This is not my SL but is the point at which I give up and will not hold a trade any more but will rather exit all positions then Double or triple up and go in the unanticipated market direction. By having this premise established before my entry I give myself the opportunity to average down, if and only, the larger context supports doing so, as well as the immediate context supporting it too.
ok this premise is established. For arguments sake lets say the bigger contexts support shorting...i.e. weakness in the background...the immediate context is a 21 bar sideways range...price is at the top of the range. Knowing 80% of attempted BO’s fail I will immediately short lets say at 2930 which is at, or near, the top of the TR. Price goes to 2932. I am adding (the size of the addition depends on “how” it got to 2932. Ok it goes to 2933. I am adding again. It goes to 2934 I am adding again. It has broken out of the top of the range. I am expecting it to trade back into the range Within 5 bars or so with at least enough for a scalp. So, I am loaded up and leveraged my position for an expected move down based on the observation that 80% of BO’s attempts fail. So, I average down instead of jumping out with a loss and repositioning myself again. Basically, by doing so my BE point is closer plus if the 80% works out I am loaded for a bigger profit and it won’t have to trade far back into the range for me to be in profit. So, where is the math on my averaged down exit? And how do I exit? Generally, here is my math. It is visual. When I see the move down give me a tick or two profit on my first entry then I am all out ALL at one wack and flat. However, even that exit is somewhat contingent on “how” the move down towards my first entry was made. Grinding..fast..violent..adverse movement against me after my last averaged down entry. Again the dynamics. In ranges price tends to trades down to the bottom of a range and then back up and repeats. However it may linger near the top for 10 bars. I could hold for a bigger move down but I generally prefer to scalp over and over as it lingers near the top locking in those profits. Just repeating the describe trading above over and over as it lingers. Sooner or later it will BO of the top, on a successful BO, or it will trade to the bottom of the range. I ain’t gonna sit there and wait for either scenario. I am a scalper. It is what I do.
Experience shows me I have a high probability of making money averaging down in the above conditions. That is that once the failed BO attempt happens I have a very good chance that price will reach my initial entry plus a tick ir two to cover commissions on that first entry. If it lingers, not quite making it there, then I will grab whatever it gives me. Maybe a small loss on my first entry and a profit on my successive entries for an overall profit on the trade. I consider an averaged down trade as one trade with multiple entries and an all out exit.
If you know how to code then code up what you can of this and check it out. However, I am of the opinion while portions of the tactic could be coded it is nigh impossible to code dynamics. Only the human brain can see and react to dynamics hence I am a discretionary trader. Even though in years past I built and had software written to trade stocks off a 3 to 5 day cycle. I no longer use the software. It won’t work off windows 10.
with this strategy u basically eyeball the mkt. say is it high or low? is the trend up or down and will it turn soon..u say up trend n mkt has sold off. they buy if goes lower buy more. and still lower buy more. same thing people do when they hold crappy stocks as positions that really were day trades. wouldnt it make more sense to risk 1 exit disk 2 exit risk 3 exit risk 4 exit? this way the trade that finally worked you have all 4 working on regaining all profit vs making up max losses on the previous 3. the only 1 making money is your 4th position anyway if you hold them all. so you are risking 3 to make 1. i bet if volpri looks at his actual position sizes if he does 3 his rosk to return is risk 3 to make 1..now he can be profitable because he never takes a realized loss. he holds to slightly above or below break even or breal even but makes money on those last 1 or 2 contracts. uts dangerous as hell and a big blow out new report just as you add that last contract say 5. when underwater on 4 of them then you are crushed. you could never scale this with size because your next trade could be your last on an unknown report or terrorist attack. im just pointing out the obvious based on what i know to be trueinteresting but I still don't really get what the point of the initial stop / target is?
Why even have an initial stop/target if what you're doing is totally dependent on
your interpretation of follow up price action.
then mark your trades on the chart buys to open 1 color sells to close 1 color. buys to close 1 color sells to open another color. then you have 4 colors and trades are long shorts to open and close. u can see your adds and subtracts all of it. this is how pros do itSure; I've posted many screencap PnL proof examples showing wins and stops, entries and exits, but not every single day since time consuming, I'm a one man company. Open to ideas.
I will post more in my journal. Here's a dilemma, question.... I often do 20+ trades daily, most are scaling into or out of swingtrades, others straight daytrades. No time to track and post every entry and exit, eg it would read like " bought 30 shares PENN at $xxx to add to existing swing" x dozensof trades.
I often do so many trades I cant screencap the daily blotter, entries and exits in less than 3 screenshots which is a pita to post regularly. Lmk ideas, thx!
Because I have to structure a setup..entry...exit...SL that is mathematically sound at least for me but I do not know beforehand “how” the trade will dynamically unfold. My Initial SL and PT are subject to change depending how the trade unfolds. But the original structure gives me a starting point to define the trade.interesting but I still don't really get what the point of the initial stop / target is?
Why even have an initial stop/target if what you're doing is totally dependent on
your interpretation of follow up price action.
nice write up and explanation thanks. the just of your system is your brain and your observations which is all good if it works for you because you sound like someone who is a good Discretionary trader. nothing wrong with that. but its important for others trying to learn from you that lots of the magic is deep with you and no chart or line or indicator or pattern will give anyone that gut feel you trade on to add or exit to your positions. i see you have a dynamic system that involves position management as price manipulation because thats your only control along with risk by just exiting again you sweat a lot to make a little compared to your max drawdowns it is a stock market trading style and should be used cautiously in futures due to leverage and margin issues. swing trading this method may give you better results depending on your bank roll.Ok. Here is the general math on an averaged down trade. I believe it to be logical as it renders me a high win rate, which I believe is necessary to successful scalping.
First, I have a max I will let any trade go against me before I will concede my premise is wrong. This is based on previous price action and is a result of the immediate volatility. This is not my SL but is the point at which I give up and will not hold a trade any more but will rather exit all positions then Double or triple up and go in the unanticipated market direction. By having this premise established before my entry I give myself the opportunity to average down, if and only, the larger context supports doing so, as well as the immediate context supporting it too.
ok this premise is established. For arguments sake lets say the bigger contexts support shorting...i.e. weakness in the background...the immediate context is a 21 bar sideways range...price is at the top of the range. Knowing 80% of attempted BO’s fail I will immediately short lets say at 2930 which is at, or near, the top of the TR. Price goes to 2932. I am adding (the size of the addition depends on “how” it got to 2932. Ok it goes to 2933. I am adding again. It goes to 2934 I am adding again. It has broken out of the top of the range. I am expecting it to trade back into the range Within 5 bars or so with at least enough for a scalp. So, I am loaded up and leveraged my position for an expected move down based on the observation that 80% of BO’s attempts fail. So, I average down instead of jumping out with a loss and repositioning myself again. Basically, by doing so my BE point is closer plus if the 80% works out I am loaded for a bigger profit and it won’t have to trade far back into the range for me to be in profit. So, where is the math on my averaged down exit? And how do I exit? Generally, here is my math. It is visual. When I see the move down give me a tick or two profit on my first entry then I am all out ALL at one wack and flat. However, even that exit is somewhat contingent on “how” the move down towards my first entry was made. Grinding..fast..violent..adverse movement against me after my last averaged down entry. Again the dynamics. In ranges price tends to trades down to the bottom of a range and then back up and repeats. However it may linger near the top for 10 bars. I could hold for a bigger move down but I generally prefer to scalp over and over as it lingers near the top locking in those profits. Just repeating the describe trading above over and over as it lingers. Sooner or later it will BO of the top, on a successful BO, or it will trade to the bottom of the range. I ain’t gonna sit there and wait for either scenario. I am a scalper. It is what I do.
Experience shows me I have a high probability of making money averaging down in the above conditions. That is that once the failed BO attempt happens I have a very good chance that price will reach my initial entry plus a tick ir two to cover commissions on that first entry. If it lingers, not quite making it there, then I will grab whatever it gives me. Maybe a small loss on my first entry and a profit on my successive entries for an overall profit on the trade. I consider an averaged down trade as one trade with multiple entries and an all out exit.
If you know how to code then code up what you can of this and check it out. However, I am of the opinion while portions of the tactic could be coded it is nigh impossible to code dynamics. Only the human brain can see and react to dynamics hence I am a discretionary trader. Even though in years past I built and had software written to trade stocks off a 3 to 5 day cycle. I no longer use the software. It won’t work off windows 10.
with this strategy u basically eyeball the mkt. say is it high or low? is the trend up or down and will it turn soon..u say up trend n mkt has sold off. they buy if goes lower buy more. and still lower buy more. same thing people do when they hold crappy stocks as positions that really were day trades. wouldnt it make more sense to risk 1 exit disk 2 exit risk 3 exit risk 4 exit? this way the trade that finally worked you have all 4 working on regaining all profit vs making up max losses on the previous 3. the only 1 making money is your 4th position anyway if you hold them all. so you are risking 3 to make 1. i bet if volpri looks at his actual position sizes if he does 3 his rosk to return is risk 3 to make 1..now he can be profitable because he never takes a realized loss. he holds to slightly above or below break even or breal even but makes money on those last 1 or 2 contracts. uts dangerous as hell and a big blow out new report just as you add that last contract say 5. when underwater on 4 of them then you are crushed. you could never scale this with size because your next trade could be your last on an unknown report or terrorist attack. im just pointing out the obvious based on what i know to be true
I just scanned his thread, but oddly he scalps out for tiny moves which is the exact opposit
of what brooks says you should do, the irony.
But are you saying he just averages down into oblivion and never exits for a loss?
I didn't look at the entire journal but didn't see much in the way of exiting for loss.
Also, is he not flat eod usually carrying losses into the overnight session to average more? If so, his journal is not for me.
The example was not an averaged down trade. It dealt with a straight long scalp. If I am long at 57.50 and market goes to 58 I am holding because my min scalp is one point. It has not arrived there yet. I was dealing with vega’s question of flexible PT’s but in the context of a straight long scalp. Hope that clears it up.um there is no way you can ever be long at the bottom of a trend change or the low of the day if you are always averaging down. you understand this is a mathematical impossibility right? in your example here you arbitrarily say..so im long at 55 and the mkt is at 60..so you have a 5 pt cushion. anyone can deal with that im up 250 pretty easy to manage. how about you are long at 57.5 and the mkts at 58 then what?? anyway when you average down you never end up with the low because you cannot it is impossible because you bought above the low already and from your charts you dont pyramid lower at all you are tyoically adding 1 then 1 then 1 vs a pyramid.
no he is flat eod. yes he takes very small gains but on multiple positions when it works. so far he hasnt shown many losses which is possible depending on bank roll. this strategy is basic and works well under extremely strong trends like we are having but they usually get clobbered for most of the trade and then get out as soon as they have a small profit. now had they actually mamaged the loss by exiting and sizing up on the next rebuy they would reduce risk and increase profits but they cannot take losses like most so this strategy is good for people who say im never taking a loss my bias is bullish so im looking for a good place to buy. not perfect but good because i will average my entry price lower. the problem is at the worst time you not only have maximum loss on paper you also have maximum positions but to get s a trader like this to size all at once they wouldnt because they dont trust their signals or the mkt short term. but they trust it longer term to come back and save them. he alluded to that when he said short term entry and he adds when the longer term is still tremding higher. so he is trying to trade a smaller fractal or counter move within a longer bull move and he adds to his losses to to reduce the loss per position then when the mkt continues its longer term bull move higher after the retrace he exits all or most of his positions at a small profit. like everything sure it can work for awhile. but one day like recently when we had a huge down trend day with zero sustained reversals he stopped his journal because on that day. if he followed his gut he lost huge.I just scanned his thread, but oddly he scalps out for tiny moves which is the exact opposit
of what brooks says you should do, the irony.
But are you saying he just averages down into oblivion and never exits for a loss?
I didn't look at the entire journal but didn't see much in the way of exiting for loss.
Also, is he not flat eod usually carrying losses into the overnight session to average more? If so, his journal is not for me.
this trade style is ideal for traders whono he is flat eod. yes he takes very small gains but on multiple positions when it works. so far he hasnt shown many losses which is possible depending on bank roll. this strategy is basic and works well under extremely strong trends like we are having but they usually get clobbered for most of the trade and then get out as soon as they have a small profit. now had they actually mamaged the loss by exiting and sizing up on the next rebuy they would reduce risk and increase profits but they cannot take losses like most so this strategy is good for people who say im never taking a loss my bias is bullish so im looking for a good place to buy. not perfect but good because i will average my entry price lower. the problem is at the worst time you not only have maximum loss on paper you also have maximum positions but to get s a trader like this to size all at once they wouldnt because they dont trust their signals or the mkt short term. but they trust it longer term to come back and save them. he alluded to that when he said short term entry and he adds when the longer term is still tremding higher. so he is trying to trade a smaller fractal or counter move within a longer bull move and he adds to his losses to to reduce the loss per position then when the mkt continues its longer term bull move higher after the retrace he exits all or most of his positions at a small profit. like everything sure it can work for awhile. but one day like recently when we had a huge down trend day with zero sustained reversals he stopped his journal because on that day. if he followed his gut he lost huge.
1. get married to their trade
2. cannot hold a winner
3. cannot sell a loser
4. have great instincts on mkt direction and trend but have trouble executing the trade properly