Averaging IN (not Averaging Down)

Discussion in 'Risk Management' started by Newc2, Apr 12, 2018.

  1. Buy1Sell2

    Buy1Sell2

    FALSE
     
    #31     Apr 16, 2018
  2. Buy1Sell2

    Buy1Sell2

    That's scaling in.
     
    #32     Apr 16, 2018
  3. Buy1Sell2

    Buy1Sell2

    Common sense would tell you that averaging up into a trade that is a winner means that you will necessarily not make as much money on a trade because the full position was not on at the beginning. As for averaging down? Common sense dictates that this is not a good idea over the long haul. It's similar to just calling in poker and throwing good money after bad. In addition, if you average in, you'll likely average out which means that you"ll choke off profits.
     
    #33     Apr 16, 2018
  4. Buy1Sell2

    Buy1Sell2

    When you average in, you create more decisions to make. This means there are more opportunities to be wrong. You don't want that.
     
    #34     Apr 16, 2018
  5. tomorton

    tomorton


    I mean, the initial position is to my maximum acceptable capital risk. The second and subsequent trades are of the same size. Scaling in to most people means opening a small trade and then adding to it progressively until it reaches full size.
     
    #35     Apr 16, 2018
  6. Buy1Sell2

    Buy1Sell2

    Sounds exactly the same.
     
    #36     Apr 16, 2018
  7. tomorton

    tomorton


    Are you doing it?
     
    #37     Apr 16, 2018
  8. Buy1Sell2

    Buy1Sell2

    Absolutely not.
     
    #38     Apr 16, 2018
  9. tomorton

    tomorton


    Then that's OK, you won't come to any harm even if you do carry on thinking they're the same thing.
     
    #39     Apr 16, 2018
  10. qxr1011

    qxr1011

    forget about it
     
    #40     Apr 16, 2018