Today is my most scary experience in averaging into stock, it just keeps going down down down down down down down, till i reach a point where i use up my buying power!!! :eek: U can imagine the emotional thing going on in my head, I'm down with 2 weeks of my profit. Just praying that the stupid thing will rebound back. Finally it did, and manage to squeeze out some profit and quickly exit. :eek: :eek: This is my scarest experience with averaging down, i should have known that when index is down, i better open my eyes much much bigger Any comments? I will sell definitely end of the day if it never rebound, but will be big loss
And where did you get the idea that averaging down on an intraday stock trade is a good strategy? You need to cross that source off your list of trading ideas. If you are long equities intraday, you need to use hard stops and live with them. This is true in any market, and especially so in this one.
Averaging in can be a strategy (see recent Futures article), but you must still have a stop where you'll throw in the towel. I have done a lot of averaging in while learning, and finally got to a point where I would enter a portion of my size to start. You can always add in to your play when your stop comes up, but averaging in can be deadly if you violate youre size rules doing it. The hardest thing for me is violating my size, and it's easy to do averaging in. Harder for me to take my stops when I break my size rules. Better to have too small size rather than to large. Small profit always better then big loss!
Averaging down intraday (TRADING, NOT for a long-term investment) is a poor strategy guaranteeing greater exposure on the inevitable losers and also lesser exposure on the inevitable winners. I would be hardpressed to think of a worse strategy for intraday trading.
Can't argue with that, specially for intraday. What got me in trouble doing it was not getting back to even before the end of the day. Then being stuck overnight and have a gap go against you. Ouch. Better strategy for long term guys with big bankrolls. I think that was the crux of the article.