You are describing two very distinct entry techniques. Let's call the average in technique, A, and the no scaling approach, B. In A you are entering without confirmation, therefore, your stop placement is ambiguous, this forces you to reduce and break down your size, ultimately it's lesser size or your risk will go through the roof. Assuming you are shorting Higher Highs, as price is approaching a resistance area that you are predicting to hold, there isn't really any recent price action above you to place a logical stop. This in my rulebook is a big problem. Notice all the disadvantages I mentioned. 1) No logical stop placement 2) Lesser size and if you get to do no adds, even very small size 3) All prediction almost no reaction because of lack of new price action above you ...and so forth. In my opinion this is without a doubt an inferior entry technique. In B 1) You have a logical stop placement, as you said, above LH 2) Full size, no underleverage 3) Mostly reaction little prediction 4) Ability to use dynamic size based on stop distance for even greater sizing. However, if you started using A because you have strong confidence in your R, nothing prevents you from adding to your position as price action develops for a B, then you can reduce the A stop to B's location, and proceed with an even bigger position, assuming your risk parameters are in order. Problem is subconsciously speaking we like to obtain the higher fills when shorting and the lower fills when buying which is why some are attracted to Entry Technique A, but it's all false sense of security. I don't believe in magic areas of support or resistance, I believe in price development, therefore Im willing to accept lesser entries and humility for the sake of better profits. In conclusion, I agree with your statement and I must commend you for the clarity you used to describe the scenarios. ESD
Thanks, ESD. I'm just over 2 years in, so technically a noob and now fighting the great battle of tossing out ego (ammo on my case about that) and just trusting my trading system instead of my opinion that some setups are better than others and that I can somehow know in advance which ones are better. Although I very rarely averaged down, I often used to trade solely on opinion "(the fundamentals are awful, price is going down, I'll hold this loser until the bitter end because I know the market is flat out stupid to be trading at these prices and I'll be proven right if I'm patient"). I learned that "the bitter end" closes out the majority of those trades :eek: I got tired of having my face slammed into the sidewalk, and learned very gradually about how to actually trade. Ammo uses MP, which I think is "guy thing" with all those nips, cleavage and virgins, so his trading style works perfectly for his methodology (and I consider it "safe" counter-trend trading because he trades his plan and never lets opinion override that). For me at this point, my comfort level is now much greater waiting for price confirmation on a trade, rather than anticipating price movement. My greatest respect for you guys who anticipate well. I'm still amazed when price finds S/R to the tick, or right at a trend line, or exactly at a 20-bar MA and I think "Why didn't I have a limit order sitting there??"
That's funny. So many of us have been through this exactly. You do such a great job of describing things. When you get in trouble in the market is when you are stubbornly convinced that you must be "right" even though the price action of what is actually happening is telling you something else. But we're holding our hands over our ears and humming loudly refusing to listen. The market must be wrong. Doesn't it know enough to act according to our version of things? Doesn't it realize how smart and informed we are? Thanks NoDoji and ESD and everyone for a great discussion and great points made.
I never would have guessed.. In fact, I went back and read all your posts from the beginning of the year. You have been consistently profitable in stocks (AMZN, POT, AAPL), in ES and now trading CL. So, naturally, I am curious. Why CL (over ES or euro-dollar where there is enough action) and why only 1 car ?
ES getting close to your breakeven 1118.00. It only took about a month or so....glad you could hold on.
See June 20th for Sunday night big gap up after extended run. Very likely this sucker is rolling back over this week.