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ES Journal Archive (2011)

Discussion in 'Journals' started by Buy1Sell2, Jan 3, 2011.

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ammo
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Quote from Laissez Faire:

Maybe I do, maybe I don`t. Regardless of that, what I do know for a fact is that from a money management perspective, it is a bad practice because your losers will be on maximum size and unless you have a plan for adding to your winners, those will be on your minimum size. One could probably get away with averaging down if it is within a tight pre-defined zone and the trader have the discipline to adhere to his original plan, but we all know how tempting it can be to change the plan when what was not supposed to happen, in fact, happened. I know very well myself, because I blew 70% of my swing trade account in stocks back in the day that I had built to a respectable size by not averaging down. Why? Because I averaged down on a leveraged trade that I simply had no intention of turning into a loss. I puked at the bottom of course and then bought the new top in anger. One of many painful lessons.

From the perspective of trading technique and not just money management, I also think averaging down is something any trader who is not facing liquidity issues should consider improving. Why? I assume that any trader who likes to scale in still believes that his first unit will show him a profit on the next tick. If not, it does not make any sense to enter at that price, no?

Now, I assume that the averager reasons that his first unit is at a potential turning point, but that there is a possibility that price will trade X points higher/lower before turning and thus justifies his actions of adding to his loss. What I have a little hard time understanding is why the trader is not willing to scratch his first unit for a small loss and then re-initiate his position at the next zone after price puts in a bottom or top and validates his hypothesis. The trader can then add subsequent units when his first unit shows him that he was right in his analysis by showing him black ink. Alternatively, the trader could hold his first unit and then add the second after his first shows him profit or at least after the market has started moving in his direction, depending on the extent of the adverse movement.

When you are averaging against a market you are hoping and expecting and predicting that it will turn, instead of waiting for a bottom or top in the making and then start initiating your position. You are by definition trying to catch a falling knife and whatever the opposite saying would be for catching a top. A bad practice and only for those who know what they are doing, which again, is a dichotomy, because I guess if one knew what one were doing one would not face this issue.

I`m not a scaler myself at this point, but I think the subject is worth discussing and I may of course be wrong. I just find it curious that I never see anyone adding to a winner here. If so, I may have missed it and I apologize in advance. ES may be a market that is more forgiving than other markets with this technique, but I`m still not sure it is a good idea. Scaling into a winner is not always a good idea either, but it is preferred, IMO. The best is of course to wait for the right time to enter and then simply enter.

Good trading all.
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l f,if you don't know how to avg ,don't,if you don't know how to trade options don't,if you are a terrible scalper ,don't,if you have had repeated success with any of these ,that is what/how you should trade..and of course if you always enter at the right time,then skip all other styles and simply enter....but if you can't figure out the right entry then you will have to make the wrong entries work,that's trading,death by a thousand stops is not trading nor a solution,but the house's will love ya..cut and dry is not trading..it's just a saying

#22161 Dec 15, 2011

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seouljah75
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Quote from Lawrence Chan:

You have a stop?
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Yes, 1226 is my stop

#22162 Dec 15, 2011

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chaykapwr
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Super long here.

#22163 Dec 15, 2011

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ammo
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its exp ,why super

#22164 Dec 15, 2011

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ammo
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sh 16.75 on nip
- 2011-12-15-tos_charts.png es 16-18 nip.png
  
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#22165 Dec 15, 2011

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chaykapwr
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Quote from ammo:

its exp ,why super
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I am not sure what you mean by "exp". Anyway, stop is at 1214. Target is 1220.00

#22166 Dec 15, 2011

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ammo
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expiration,i thought super meant you were looking for a large move

#22167 Dec 15, 2011

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ammo
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es 13 bid for 1/2 on short will addd up to 26
- 2011-12-15-tos_charts.png es 12 5.png
  
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#22168 Dec 15, 2011

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JoshDance
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Quote from bigsnack:

Thanks for the encouragement. I hit my max daily loss limit once this week, which is the first time that's happened in a very long time. It rattled the heck out of me, so I'm feeling bitter
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No worries buddy.. you're a great trader and will have a great day tomorrow!

#22169 Dec 15, 2011

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iloveoptions
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Quote from iloveoptions:

Longed 1210.50 target 1216.75
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Target Hit. Bidding 1205.75, adding 1191.75, stop 1179

#22170 Dec 15, 2011

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