AHG - Profitable Strategy for Struggling Traders

ROFL......gotta love it

 

A. I'm sitting here with beer and charts, usual Sat afternoon, and am puzzling over your averaging up. My quandry is if I see a strong move with momentum and I enter on a pullback, which I feel may be just part of a big move. At the next pullback I have 2 options, to take profit on the first entry, let a second pullback develop and enter with 2 contracts, and so on. That way I have banked something. The other option is to just hold onto the first and add a contract on the appropriate signal, while risking a full pullback to breakeven on the first. A little too complicated for me to backtest. Any thoughts on which might be the best in the long run?

Thanks,
Don

 

Don,

Averaging up, in my humble opinion, is only pertinent to those with good accuracy and a solid understanding of how the market and daytrading works.

Now, it is possibly the last step to good fortune as far as phases and stages.

The concept of only adding to a winning position is phenomenal because by definition it ensures that your trades are only about small losses, break evens and small to gigantic wins. Notice this is exactly how I suggest your money management results should be so it's highly compatible with AHG.

Nevertheless, you need to be able to handle, from a psychological perspective, a streak of small losses and break evens, in many cases watching small winners become small losses. This is the negative aspect of averaging up. The positive aspect is the monumental winners it can and will provide if you do it right.

When I average up, I add to a a winning position on retracements only if the major trend is intact and healthy always keeping a stop for ALL positions, this stop strategically placed at a definite change of a trend. As the trade keeps going in my favor, I keep adding to the position and adjusting the stop, the stop is the same for all brothers and sisters in the trade. As the trend develops the trend pivotal point obviously moves up as well.

When the trend ends, you take a small loss/break even on the last position ONLY or last two depending how flexible you were and all the initial adds collect massive returns, especially the original one.

It is the holy grail of money management systems BUT for seasoned traders not for someone who has just starting to get his/her feet wet with a new system.

Averaging up is probably the most important reason as to why I was attracted to future's leverage. In fact, I've reached 20x with this technique and knowing I had secured profits on 85% of the adds felt like I was the king of the world. In the ES I usually trade between 3 to 10 cars depending on the stop risk of the trade. I have yet to average up aggresively on ES since I'm fairly new to the contract but when I'm comfortable on a great run this number could go all the way up to 40-50, without giving too much info on my personal total leverage. When averaging up, at least on the YM, I have used full leverage on the account without a single ounce of fear because of secured profits on most of the adds. When you get a nice run the profits are nothing short of a monstrosity.

Obviously, if the trade does not go in your favor you don't even touch leverage or add to your position.

Very powerful indeed but requires complete dominance of your psychology.

Anek

 

Rule Two: Press your winners

Phantom of the Pits

http://www.webtrading.com/phantom/chapter6.htm

 

Averaging up illustration on the daily dow when it was trending strongly.

No, I did not do this, I wish I had though.

However, I have accomplished something similar during strong intraday trends.

You might ask yourself, why not start with 12 and move your stop accordingly as higher highs and higher lows are made ?

The answer is naturally risk management. If you were wrong from the start you take a full stop on a full leveraged position, not exactly how we want to trade and protect our capital.

Averaging up is great stuff.

Anek

 

“When I am bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don’t buy long stock on a scale down, I buy on a scale up.”

“Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit. Wait and watch.”

Jesse Livermore

 

Yep, he certainly knew what to do albeit many times he did not do what he KNEW he had to do.

Lack of discipline I guess, we have all visited that point sometime during our trading careers.

Anek

 

And that's what makes all our efforts worthwhile doesn't it.
Couldn't but help think of this:

The Children's Hour
Poem lyrics of The Children's Hour by Henry Wadsworth Longfellow.
Between the dark and the daylight,
When the night is beginning to lower,
Comes a pause in the day's occupations,
That is known as the Children's Hour.

I hear in the chamber above me
The patter of little feet,
The sound of a door that is opened,
And voices soft and sweet.

From my study I see in the lamplight,
Descending the broad hall stair,
Grave Alice, and laughing Allegra,
And Edith with golden hair.

A whisper, and then a silence:
Yet I know by their merry eyes
They are plotting and planning together
To take me by surprise.

A sudden rush from the stairway,
A sudden raid from the hall!
By three doors left unguarded
They enter my castle wall!

They climb up into my turret
O'er the arms and back of my chair;
If I try to escape, they surround me;
They seem to be everywhere.

They almost devour me with kisses,
Their arms about me entwine,
Till I think of the Bishop of Bingen
In his Mouse-Tower on the Rhine!

Do you think, o blue-eyed banditti,
Because you have scaled the wall,
Such an old mustache as I am
Is not a match for you all!

I have you fast in my fortress,
And will not let you depart,
But put you down into the dungeon
In the round-tower of my heart.

And there will I keep you forever,
Yes, forever and a day,
Till the walls shall crumble to ruin,
And moulder in dust away!

 

A, thanks for input. I did spend some time on krelisk.com and was hoping if you can tell me which specific indicators you use to shows those dots. My question is it FIB retracement or some other indicators.

I am using quotetrader, but if somebody can copy/paste tradestation indcator code that would be good enough...b

being a programmer i hope i can decipher and code in quote tracker.

AHG is still not very clear, doing lot of study using camtasia recorder. Now researching HA Candles.

thanks in advance

 

Bill,

{ _TRO_Dynamic_FibsSR - draw fibs between the Support/Resistance lines }

{Attn: TradeStation
if this indicator is posted on the TradeStation Forum, I, TheRumpledOne, did NOT post it there,
so I can't be blamed for this indicator having my contact info.}


{Programmer: Avery T. Horton, Jr. aka TheRumpledOne,
gifts and donations accepted, PO Box 43575, Tucson, AZ 85733 }

{ © Copyright 2006 Avery T. Horton, Jr.}



inputs:

iStartDate(1060120), // if not intraday, date to start counting

iPrice( Close ),
iDecimals(2),
iPeriods(5),
// iHigh( HighD(0) ),
// iLow( LowD(0) ),

iFibPlot("R"), // "P" = projections, "R" = retracements
//iFib1(.24),
//iFib2(.38),
iFib3(.50),
//iFib4(.62),
//iFib5(.76),
//iFib1Color(darkcyan ),
//iFib2Color(darkbrown),
iFib3Color(darkgray),
//iFib4Color(darkbrown ),
//iFib5Color(darkcyan ),
HighColor( red),
LowColor( blue),

idummy("");

variables:

//xFib1(iFib1),
//xFib2(iFib2),
xFib3(iFib3),
//xFib4(iFib4),
//xFib5(iFib5),

tFib(""),

xLowestLow(0),
xHighestHigh(0),
xRange(0),

xPosition(0),

oExtremeVal( 0 ),
oExtremeBar( 0 ) ;


variables:

xBars( 0 ),
xPeriods(05),
xOldPeriods(0),

Dynamic_R( 0 ),
Dynamic_S( 0 ),
OldDynamic_R( 0 ),
OldDynamic_S( 0 ),
PrevDynamic_R( 0 ),
PrevDynamic_S( 0 ) ;


{commentary variables}
variables:
xcomm(0),
oComm1( "" ),
oComm2( "" ),
oComm3( "" ),
oComm4( "" ),
oComm5( "" ),
oComm6( "" ),
oComm7( "" ),
oComm8( "" ),
oComm9( "" ),
oComm10( "" );


{ CALCULATIONS }




If date this bar >= iStartDate
then begin

{save old values}

If Dynamic_R <> PrevDynamic_R
then OldDynamic_R = PrevDynamic_R;

If Dynamic_S <> PrevDynamic_S
then OldDynamic_S = PrevDynamic_S ;

OldDynamic_R = PrevDynamic_R ;
OldDynamic_S = PrevDynamic_S ;

PrevDynamic_R = Dynamic_R ;
PrevDynamic_S = Dynamic_S ;



{ high / low for period }



xBars = xBars + 1;




oExtremeVal = Extremes( L, iPeriods, -1, Dynamic_S , oExtremeBar ) ; // lowest low

oExtremeVal = Extremes( H, iPeriods, 1, Dynamic_R , oExtremeBar ) ; // highest high



If Dynamic_R <> H
and Dynamic_R < PrevDynamic_R
then if PrevDynamic_R <> 0
then Dynamic_R = PrevDynamic_R;

If Dynamic_S <> L
and Dynamic_S > PrevDynamic_S
then if PrevDynamic_S <> 0
then Dynamic_S = PrevDynamic_S;

{
If iLow <> iLow[1]
Or iHigh <> iHigh[1]
then begin
}
If iFibPlot = "R"
Or iFibPlot = "r"
then begin


xLowestLow = Dynamic_S ;

xRange = Dynamic_R - Dynamic_S ;

//xFib1 = iFib1 * xRange + xLowestLow;
//xFib2 = iFib2 * xRange + xLowestLow;
xFib3 = iFib3 * xRange + xLowestLow;
//xFib4 = iFib4 * xRange + xLowestLow;
//xFib5 = iFib5 * xRange + xLowestLow;
end // If iFibPlot = "R"...
else Begin

// oExtremeVal = Extremes( iLow[iPeriods], iPeriods, -1, xLowestLow , oExtremeBar ) ; // lowest low

// oExtremeVal = Extremes( iHigh[iPeriods], iPeriods, 1, xHighestHigh , oExtremeBar ) ; // highest high

xLowestLow = Dynamic_S ;

xHighestHigh = Dynamic_R ;

xRange = xHighestHigh - xLowestLow;

If close > OpenD(0)
then begin
//xFib1 = iFib1 * xRange + xHighestHigh; // high projections
//xFib2 = iFib2 * xRange + xHighestHigh;
xFib3 = iFib3 * xRange + xHighestHigh;
//xFib4 = iFib4 * xRange + xHighestHigh;
//xFib5 = iFib5 * xRange + xHighestHigh;
end
else begin
//xFib1 = xLowestLow - iFib1 * xRange ; // low projections
//xFib2 = xLowestLow - iFib2 * xRange ;
xFib3 = xLowestLow - iFib3 * xRange ;
//xFib4 = xLowestLow - iFib4 * xRange ;
//xFib5 = xLowestLow - iFib5 * xRange ;
end;

end;

// end; { If iLow <> iLow[1]... }



//Plot1(xFib1 , "fib1", iFib1Color ) ;

//Plot2(xFib2 , "fib2", iFib2Color ) ;

Plot3(xFib3 , "fib3", iFib3Color ) ;


//Plot4(xFib4 , "fib4", iFib4Color ) ;


//Plot5(xFib5 , "fib5", iFib5Color ) ;



Plot6(Dynamic_R , "Resistance", HighColor ) ;

Plot7(Dynamic_S , "Support", LowColor ) ;


end; // If date >= xStartDate


CommentaryCl( "Dynamic_R: ", NumToStr( Dynamic_R , iDecimals) );

CommentaryCl( "Dynamic_S: ", NumToStr( Dynamic_S , iDecimals) );