Averaging down in day trading - when to take a loss?

Discussion in 'Trading' started by lukas, Jul 13, 2017.

  1. Robert Morse

    Robert Morse Sponsor

    You set up your own plan for each trade and follow it. It is really that simple.
     
    #11     Jul 13, 2017
  2. I think your question is rather vague.

    Each trade should stand on its own merits.

    Stops... whether "points" or "Dollars"... are subjective. (Not subjective as whether or not to use them, but rather where to place them.)
     
    #12     Jul 13, 2017
  3. Xela

    Xela


    I don't understand what this question has to do with "averaging down", which you put in the thread title.

    I have a maximum, fixed risk-exposure for each type of trade I enter, in accordance with what I've worked out for its position-sizing, as derived from its proven edge, win-rate, overall PF, and so on.

    I wouldn't ever be trading "100 units" on some trades and "2,000 units" on another.

    In other words, I already know the answer to what you're asking before I put the trade on. There's no sense in trading on a "wait and see which way it moves before determining the total position-size" basis: that's guessing, not trading.
     
    #13     Jul 13, 2017
  4. There is a famous picture of Paul Tudor Jones sitting at his trading desk with a sign on the wall over his shoulder... "Losers average into losers".

    IOW... "averaging down" is dangerous. Smart traders don't do it.
     
    #14     Jul 13, 2017
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  5. truber

    truber

    The research I've done and the method I use for stops is based on price movement, whether ATR or supports levels, etc. not monetary because the market doesn't care about your $ loss. My position sizes are a direct result formula of were I am going to place a OCO bracket limit and stop on entry. I may move my stops up as the trade goes my way reducing risks and locking in profits. All this is calculated in before i make the trade. I can send out the formulas out if you wouldlike to review for some ideas. there is nothing proprietary. And i don't average down any more, having suffered that mistake. I may on occasion scaling in in 3rds if I like the trade but not confident in the direction, Meaning indicators are mixed, but this is rare and trying to minimize as i gain experience. The way i deal with taking a profit to soon is being very happy with singles and doubles and know home runs are very rare. I'm very happy with 2-4 $300 wins per day. i also don't just jump back in, i wait for my setups.
    Hope this helps
     
    #15     Jul 13, 2017
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  6. speedo

    speedo

    People who average down are typically those who have trouble taking a loss. There is no avoiding losses in trading so one must take them as their plan dictates without hesitation.
     
    #16     Jul 13, 2017
  7. lukas

    lukas Guest

    Well, there is a video on Youtube of Tom Dante, who traded together with Nav Sarao in Futex , and he says he never used stops and was a master of averaging - as were many of his colleagues, professional traders after all. How do you respond to that? Is that not true, you think?
     
    #17     Jul 13, 2017
  8. I wouldn't let him manage my mother's money.
     
    #18     Jul 13, 2017
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  9. speedo

    speedo

    The guy is a professional guru. You can pay him money and find out.
     
    #19     Jul 13, 2017
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  10. Averaging into losers works until it doesn't... and then the result is dire. And usually once is all it takes.

    Just ask Victor Niederhoffer.
     
    #20     Jul 13, 2017
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