Im 100% sure this market will pull back to the MA now, it HAS to. I THINK this is what Mark Douglas teaches, thinking in probabilities. This probability is guaranteed to work.
Price does always pull back to the moving average, but it's a MOVING average. If you began fading the first overextended move too early, there was no chance to average into a winning position, and the moving average has moved to 1.35 from the initial spot it would've pulled back to (if it had done so).
Riskaddict, Great chart, you can see the accumulation by the pros at the lows on various bottoms. It would be great if you could post another chart like this in the future to see how it turns out. Thanks for sharing.
So far so good. You'da man! (nicely read) --- Edit: hard to say where the longs' stops are if trying a short. Also, not sure how many people would want to stay short over a long weekend with this guy on the loose: http://www.youtube.com/watch?v=xh_9QhRzJEs
Hey guys, thought I would say hi and start joining some of the discussion...being lurking awhile...just no posts. i was looking a deja's posts and Im trying to wrap my brain around it a bit...I understand that price has to reach the MA 100% of the time but that seems irrelevant. All that matters is your pricing point compared to the MA...right? Take today for example, say you got in 4 (1 contract each) times on the way up at 82.39, 83.20, 83.39, and 83.75...bascially averaging at all the peaks (which is completely unrealistic I realize)..that gives you an average price of 83.18...assuming not adding contracts as it goes further against him and looking at the 20 ema...this is a big time loser today given that the ema is at 83.44 right now. now same scenario only add 5 contracts at 83.75 instead of 1...avg price 83.47....hmmm Am I missing something? There must be something in a strategy like that to make sure your average pricing point is always x% above the EMA? Adding contracts as it goes further against you seems like the only way to make it work. Man thats a lot of heat.
Yep, that's Nodoji's been saying for a while. Keep in mind, though, that he usually targets 10 ticks, sometimes as few as 5 ticks. If you look at a 1 min chart (or lower) you will see that all those extremes pulled back considerably more. Also, he adds much more aggressively than in your example. Not my cup of tea and I certainly think it's a dangerous strategy that sacrifices expectancy and tolerable drawdowns in exchange for a semblance of certainty (i.e. making money for psychological satisfaction), but the way I see it, if he's been doing it right he should have turned a profit today; a different matter is days where you get stop runs of over >50 ticks, try to fade them, and then they continue for another 100 ticks (I remember a day where oil kept running stops for almost 1000 ticks, that's a full 10 dollar day).
So.. I have a question. Is this averaging up done off a 1 min chart and if so what MA is being used? (On a 5min chart this strategy doesnt seem to jive mein!)