Instead of averaging down, I prefer to take the loss and rather re-enter. If, I'm proven right on that second entry, I'll see if I can add more contracts as price moves my way, i.e., averaging up. This ensures that full stop-outs are always taken on small size and you get the occasional big winner on larger size. Averaging down on the long side worked when the FED was juicing the markets and interest rates were zero. Different conditions these days with the market routinely moving 100 points in 24 hours. Speaking of the FED. Fundamentally, what changed yesterday that should fuel a rally? Rates were raised, yes? What else?
Yeah you don't know who will hit the door next, if anyone. There is an extra dimension here because EVERYONE is active. Taking my own advice: Done today: 21 trades for +387. All cut short after testing the Entry code. Good shakedown run with MC-CGQ-IronBeam. Found a couple of minor glitches. Orders are getting executed in under 150ms on a 90ms ping (slow connection here).
Although I don't know who will barge in next, I do know who will fall off next. This was what it felt like recently.