Averaging down one tick is not what I would call bad trading. But I would still classify it as inefficient. If one chooses the averaging down route, one has to put a position on one piece at a time. If one trades 5 ES at a time, and expects a need to average down a max of 4 times, then one can put on only 1 ES initially. If the trade immediately goes in the favor of the trader, there is obviously no additional need to average down. But if that happens, one's exposure is less, because one was saving capital in case there was a need to average down. In other words, with averaging down, one is ensuring less exposure on the inevitable winners that take off immediately in the right direction and never look back. But all trading systems/approaches have inevitable losers, and by averaging down, one is ensuring greater exposure during these times. If one has a winning system/approach, it makes the most sense to go all in at once, not piece by piece.
whoa whoa, trading is EXACTLY about context....... Absolutely and totally correct. I don't agree with you saying "go back and study patterns as they develop" though. I believe study must be done in REAL TIME. In real time, patterns are never completed and it's so easy to bullshit yourself "that's what I would have done and this I wouldn't have" etc.!! At the same time I am not trying to suggest looking at the charts(past) is not useful.
Studying patterns is helpful to learning to see stuff in real time. Its gives a basis of understanding and from there one must watch everything in real time as it unfolds. 100% agree that its all about real time!!
Dear Lord, Thank you for this volatility. Once again I bought support, as usual, and said to myself, here we go again, maybe this one is the real reversal, and in the afternoon.... Bing bang boom once again near resistance. Keep them coming, I'm loving it. The Dragon / W formation, that was just extra free money at the end(thanks Anek for that). ADK
PEOPLE.... IT ALL DEPENDS ON EACH ONE'S STYLE OF TRADING. IF ONE WANTS TO WORK A POSITION 'UNDER' LET HIM DO SO. I don't like to do that. For me, the action is tight and i want to see something working right away or i'm out, but there are so many approaches and therefore so many techniques that just about everyone can have a good method in their hands... Problem is: Only a few realize the correct money management technique to go with that method..... And why? Because they weren't disciplined enough to follow the method from the beginning and document each trade and then learn from the past. This is every trader's problem nowadays.
Avgdownking: Stop acting stupid. "keep em coming, I'm loving it" ??? Are you serious? Is this how you react to winners? How do you react to losers?
I usually have to wait a few days to get results on a full swing, when it all happens intraday, I got all the reasons in the world to celebrate, as for your comment, fuck off, I react however I choose to. ADK
Do you mean they scratch the trade as soon as the their BUY price is being offered and they try to bid the lower bid to average down their position --and vice versa for shorts? If I'm wrong, can you please explain your post with an example? Bernard
Typical newbie concept thinking averaging down is an inevitable blow up. Risk management and averaging up are not mutually exclusive. ADK