Well, I think you would need to demand a few things, your examples are a bit drastic, and not something I would conduct. For instance, considering daytrading, a trending or ranged hourly chart. Point of no return, a change of a trend. Key things like that, including no averaging down into infinity.
I don't think I have an edge, only thing that works for me is buy low and sell high, particularly when price is extended from the mean in a trending market. Maybe that's an edge, but I doubt it.
Stop trading, start researching for an edge! Seriously, look into CT at the ATR, especially if you entertain the idea of averaging down. Another don't for this, don't do it on a trend-day. What's a trend day? Read any book on market profile, that's pretty well explained.
Consequently, would you consider a CT at ATR with reads from Market Profile to avoid doing it on a trend day, an edge?
It could be an edge (probably needs some tweaking from this basic formulation) - but the take-away from this should be, backtest it over 500+ setups (if possible, that times several markets), and see if you can get something with a decent profit-factor (> 1.5) - in-which case, it has an edge.
If you average down to a known point of failure (where the setup has been proven invalid) and the sum of the differences between each buy point and your ultimate stop equals your initial risk (a couple percent of your account, unless you're psychic)..... I think it can reduce cost basis and give a realistic chance of dumping a lingering position at break even, if it has not launched. This last part is the tricky
The notion that averaging down is for losers is absolutely incorrect. For a new trader with no risk management it can be very dangerous, but if you have your rules in place it can be the difference between failure and success. Obviously the usual place for averaging down would be a reversion-to-mean (RTM) trade. I'm not talking about midday news 5-10-20% news spikes, just morning or afternoon unusual buying/selling. When I see an RTM setup (which is where I make most of my $) there's an automatic thought process that happens. 1-How far is this likely to go? 2-How big do I want to be at the max range? 3-If I want to start scaling now what size should I start with? 4-After my initial position if I scale in every 5-10-20c what size do I place if I want to end up with my max size, at my max risk? I don't cognitively think about these. I'll pull up a chart and in the back of my mind think (ok this may go $1-2 more in the next 1 hour, if that happens I want to have #k shares, if it goes further my max loss is $$k so that would get me out around xx.yy price. If it doesn't go to the extreme price I want to at least have xxxx shares, so I can make yyy to zzzz dollars.) This thought process literally takes a few seconds, and I'll usually already have my first lot. It becomes instinctive once you trust the edge. Personally my max single RTM loss is around $10k. I hit this only twice this year. Find your comfort level and trade accordingly with rules in place and it won't be a problem. If I couldn't average down I would be working at Burger King right now.
Now, the cat is out of the bag! We got Dustin and Ammo (ES Journal) supporting it. Thank you for those words Dustin, inspirational, helps me keep fighting, looking for a way.
many of my best fills are on news spikes, presumably because I am the only limit out there fading the move and the stops have no choice but to come to me. I'm sure they think the market is hunting for them. but it's more like sitting there fishing with a bobber in the water. like I said, I'm always spread, so on one side I'm usually adding to losers and on the other usually adding to winners. There is no question in my mind whether I want to go long or short, I know what position I am trying to build. I see no difference between what I do and optimized dollar cost averaging. You think about it a while, and do your tests, but I am pretty sure in the end you will see averaging down without averaging up will get you in the end. I would laugh at anybody who states one of those rules out of the book, "never add to losers only add to winners." and it's equally small minded opposite, "never add to winners, only add to losers." More serious discussions can be found in the longterm investment literature on the value of DCA, and there you will also find some mathmaticians who repudiate it as being inferior to going all in. (and then there is the notorious and ever endless discussion of scaling out which is just the exit side of the entry we are discussing here) wasn't really replying to your post Dustin, you and I agree especially the part about Burger King, but more importantly, point number 3, which is the ultimate question if you Martingale which is "How much to start with?"