No it is not false. While a trendline may have a high probability of acting as strong support or resistance... it does not provide a reference point that sellers (supply) exist at this level. Price has never been here yet! Fib extensions just the same-- another tool (and to me it is rather spooky actually how often they act as walls I might mention)-- yet they dont indicate sellers truly existed at this level. Nor does an ATR range. Nor does any other number of ways used to predict where price may turn during all time highs. Only once price has established a pivot can once conclude with certainty that supply or demand exists above/below current price. This is an absolute fact ammo and cannot be disputed. What we dont ever know however with certainty is whether the buying pressure on the way back up will be enough to absorb the supply and breach the level... or whether enough unfilled limit sell orders still exist along with new sell orders that will exceed available buyers-- thereby driving prices lower. This is the uncertainty that also cannot be denied. But regardless- a key point here is the pivot gives one an actionable point of reference in which to trade against. Empirical proof that sellers did indeed exist at this level. Trendlines do not.
By the way ammo- trendlines are extremely subjective. You provided a chart where it appears that price hit the line perfectly and then reversed. Another poster earlier in the thread posted a chart where it appears price pierced the line by about $.12/.13 before finally reversing. Then theres the never ending debate on how should trendlines be drawn-- wick to wick... candle body to candle body.. a combination thereof... etc. And then comes how many points constitutes a valid trendline. And then the issue of swing highs and lows that cause a skew --requiring the observer to make a decision on where to start a trendline- which causes any number of sloping degrees-- thereby creating a number of trendline resistance pricepoints. So much subjectivity ammo in general with trendlines-- so convoluted that after the fact so much subjective rationalization is often made as to how and why a line was valid (the beholder seeing what they want to see)... without realizing there were many other lines that failed. Pivot supply and demand are 100% absolutes- no gray areas.. no subjectivity involved. A big big difference in and of itself. With that said - again to reiterate- I am on the same page with you that the area below/above a pivot constitutes a high probability area/zone.
the thread topic is averaging down since riffraff declared that he doesn't need to average down he has decided to change the topic to the way he trades because if you do it like he does you won't need to average down so if anyone wants to know how to trade just point them to the average down thread hey riff raff can you suggest a good thread I can go to where they discuss averaging down? I'm sure you can since you seem to know everything
For a trader who supposedly trades off clearly defined hard levels with high probability it sure seems funny that you don't require any proof of success from your Mentors. This reminds me of the insurance commercial on TV where the girl has a date with a supposed French model ... it's true because she read it on the internet. You also state that your trading uses clearly defined triggers like candle patterns. Well, it doesn't take a new trader very long to figure out that candle patterns are NOT consistent on short intraday time frames. One man's Hammer can show up as another man's Hangman or Doji; it all depends upon which data feed and charting package they use ... along with a whole bunch of other variables. It also appears that you don't seem to experience slippage like normal traders. One of the reasons why averaging into a position can help a strategy is that it allows a trader to enter with limit orders and experience no slippage. Any trader knows that exiting a position with a tight stop loss is a joke when a stock makes a sharp price move. You seem to think that averaging down is 100% bad even though you have an extremely subjective trading strategy and have no method of even determining whether it would hurt or help your trading. In regards to Snake Oil salesmen - I would pay a lot of money to learn new trading techniques that actually worked. I've been trading a very long time and unfortunately I have yet to find a single web-site full of gurus that actually "Shows me the Money!" They all love to make calls and talk about winning trades but "NEVER" do they show their results! I like to pull back the curtain before making my decisions i.e. the Wizard of Oz. Your screen name is "riffraffpatrol" ⦠I find that quite ironic.
Didn't read the entire thread, but drawing attention to a famous picture of Paul Tudor Jones at his desk with a sign on the wall viewed over his shoulder... "Losers average losers".
I did turn a losing trade into a winning trade by averaging down once today, but it would have been better to just get long 1 contract at the correct price level or to short where I 1st went long. I went long for a scalp trade in CL. The trade went against me around the same ticks as I wanted to make. However, it was now at the price level where my real setup tells me I should probably go long. So at this point, I have the choice of bringing down my stop, taking the loss, or adding another contract. I decided to add another contract and averaged down my cost with my stop now at the point where the market shows me I am wrong to be long and should have instead gone short. The market approaches BE and then goes back down a little. I felt I could now reduce my risk a little if it goes back to BE so got out at BE -1 for 1 contract. Now at this point I move my stop for last contract up a little but leave trade room to breath and bring the target down from where I had it for the original contract on when I got in this trade. At this point I am willing to either take the standard stop or target profit for this trade. I did not want to again go long a 2nd contract if it approached my stop since at that point the market would have changed its trend for sure. So I walk away from the computer and I am able to get out at a profit for this trade. I then switch from real money to Sim to practice for the rest of the day a few more scalping trades. Like I said, I still think it would have better better for me to wait more patiently for a valid trade setup then get in too early, however I am obviously happy to make a profit for the day. I do think you can average in once in a trade if you are still above the price where the market would prove the trade to be incorrect. It's also possible to scale in and out. For example, you want to go long or short and average a little into the trade as part of your plan or while you are managing the trade like I did. The best way is when you correct in the trend, and can get both contracts out at profit rather than reducing risk at BE for 1 contract. For the most part I don't think averaging in is good since for example if market kept going straight down I would have taken a much bigger loss on this trade than I normally take for profits. However, I did realize in the middle of the trade, that at the place my stop was would have been the correct place to go long and so I did.