Averaging Down the real Holy Grail

Discussion in 'Risk Management' started by Avgdownking, Oct 9, 2007.

  1. Here is the holy grail of trading.

    Averaging Down with money management and technique.

    Not recommended on equities but on indexes is fine.

    Markets move in waves up and down almost never on a vertical line so you can take advantage of this.

    All in 5 simple steps

    0) Identify the strong trend of the market

    Assuming it's long, like right now

    1) Enter minimal position every time a significant support level is reached.

    2) Make sure there is a significant distance between
    each support level for your next position assuming
    you never reached your resistance target.

    3) Sell at next resistance level

    4) Rinse at repeat

    5) When the trend changes, read when a massive support level is broken and held, take a loss and trade with the new trend.

    Why ? Because before a major trend changes the index will zig zag like no tomorrow, this can take months and in the meantime you are collecting your money.

    The losses are ugly but the numerous winners more than make up for it and you will never blow up.

    That's about it, sounds dumb but it's not. Many say keep your losses small and your winners big, bla bla bla blu ble blu. Well, isnt many small-med winners and very few large losses the same thing ? Think about it. It's all in the the money management.

    There you go works forever. Do your homework, you can thank me later.

  2. Perhaps "Averaging Down: The Easiest Way to Blow Out Your Account" would be more fitting?

  3. Nahh. ..... More like averaging up.
  4. As much as an oxymoron as it sounds you must the cost averaging cleverly and responsibly. Problem is most of the traders cannot.
  5. Now let me see if I have this straight: in three different ET threads right now there are references denigrating "vendors" as purposefully misleading to separate newbies from their money. In one case someone is going absolutely postal over the same rehashed hash topic we're all sick & tired of seeing by now.

    And in this corner there is someone offering "free" advice on how you can't lose trading commodities. Where are all the scathing rebukes for this misleading crap? Who is going to save the vulnerable newbies from losing all their hard-earned dollars following this absolute road to ruin?

    Is it OK to post advice which will decimate anyone who tries with absolute, unequivocal certainty... just because the misinformation is free? Trust me, cost of that education will come far higher than a few thousand dollars for those who try.


    I find myself coming to this site less and less, because it keeps delivering less and less on a consist basis. Fact is, there's damn little worth reading any more.

    Take away all the myriad JH, Timmay and tradezoo threads, subtract all threads started by mymini (harmless character) and stocktr3r (does he actually believe what he touts in here? Yikes!) and you've essentially cut the recent content in half. Barren as the Miami-Herald sports section these days.

    Someone please explain to the OP that averaging down and selling naked puts thru all market conditions have the exact-same long term probabilities. I'd do it myself, but instead I'll sign off for a week or three. Might actually raise my IQ a few points in the process :cool:

  6. Good.

  7. What the OP describes actually is a SCALE IN technique with initial position below max position size.

    Scaling works fine. Blowing up occurs when your position sizes exceed your capacity to deal with reality of the market. Scaling into trades with a predetermined max position size is not actually 'averaging down' in the 'martingaling' sense.

    But adding past your max position size (creating overleverage) with reckless abandon is where the trouble begins.

    Just remember, no one can trade without striking out.. so take your losses when you need to.
  8. To AustinP:

    I assume the P is for prick. You don't have a clue as to what I'm saying. You conceded bastard.

    To scriabinop23:

    Oui, that's the way to do it.

    #10     Oct 9, 2007