I would like to discuss averaging down

trading rule one: never think about stop loss. very critical.

find the right vechicles which do not need stop loss.

if you do not use margin, then you do not need stop loss at all. no one will force you out. let the market corrects, if you are wrong, do not panic, hang on, wait a good spot to cut loss, think it as another trade ignore where you get in.

never average in, average down. averaging down is the worst strategy to bail you out. 90% time if you are patient enough, it works. but if you are not lucky, you are in 10%, then you lose big. I choose to wait, treat it as another trade, or as an indicator, if I see my position red for a period, I will think in opposite way, find what kind of setup there.

for example, if I bought something yerstoday, but today it gapped down, first I tell myself, ok, I am wrong, so what? so I will look through what things make this gapdown, after I figured it out, then I look at the chart, if it gapped down to let's say from $50 to $30, then in the opening, it dropped further to 23 something, then stopped, I will mark 23 as a bottom, then I keep watching, when it bounced to 27, it stopped, it started to go down, I mark 27 as top and got out of my holding. of course it is not so simple, since the market is up/down in bars.

or based on the infor I gained, I may put a mental stop at 23. if it never falls back, I trail mentally until the market refuse to bounce and I am out.


the first thing is Never panic when you have a loser. do not use stop loss at intra-day chart, there is no sense at all. stop loss should be always at critical price level. like those daily chart major support/resistance/ 50days/200days EMA price.

intra-day charts are just noises. my point is you should focus on trading idea whether technically or fundementally, and 99% time on those two.

stop loss is just "in case" strategy. my rule is I will do my best to avoid puttinf myself in the place of I am wrong and need cut loss situation in the first place.

trading idea is the key, put a stop loss, recognize a chart pattern always is after-fact thing, not help you profit at all. from the chart you just see the past, the past is not useful at all. and the past can not predict the future.

the reason most guys use stop loss, I think they are lazy. they just gamble. hope luck, that is why they lose. the market has so many combinations. my secret to trading success is I am able to think ahead, use my trading idea to think, see those unprintted charts, of course I am a little bold, willing to risk on my ideas. but not risk on other people's ideas.

my suggestion is: do not day trade. study and prepare and plan each trade carfully, do your best to avoid put yourself in the situation of "cut loss" in teh fifrst place. then execute your trade on daily chart.

in day trading, frequently stopped out, you will have huge psycholgical damage, that will drive you into negative mode. the more trades you make, the more chance you will get hurt. we human being are hard to recover from getting hurt.

so from the start, try to avoid gettig hurt. the better mentally positive, the better your trading.

good luck

 

I think it's important to note that you do not wait for the turn, is it because you lack bar/candlestick education or you just don't find it reliable ?

Thank you for your contribution in this thread.

 

Would you provide some samples of these please?

 

sometimes on a major resistance, more so in lite volume markets,we are all watching the same thing,the boys will turn it early to get the lions share of the kill,so i don't mind entering early, adding at the res point ,and above it ...just use mp ,and cross reference it to resistance in other correlating instruments..lack. i have maybe a thimble full of candlestick knowledge

 

no one cares about your stop loss,so does the market.

in another word, stop loss is your choice. not the market asks you to.

if you turn your account into cash account, no one will have any control on what you are doing. your brokage will not force you out a position because of its paper loss. you can buy any stock you want.

the market goes up 10% or drops 30%, you can ignore the bullshit at all.

if you buy options either put/call, you use your own money, brokage's money is not invlved, they can not have control on your paper loss. why bother hurry to give money to other market participants.
you can ignore their buying/selling activity totally. you can strickly follow your own plan while ignore others' buying/selling. the only thing you need take care in option is: before expiration closing, close out all options still in money, otherwise you buy too much and if it convert into the underlying, you may need borrow money from your brokage.


so trading rule two is: never use margin. borrow money to do something has cost, you are partily controlled by the lenders. that is bad. your decision about doing things are totally affected. that is why those large banks go belly up if no goverment bailout, since they are controlled by the market. in your case, controlled by the brokage.


if you use cash to buy your dream house, do you worry about forclosure? do you worry about your job security ? you are stuck with a deadend job, you hate it,but you can not switch because you need motgage payment, are you in this situation....

lots of forclosures if people can choose to hold (most people have no choice because of mortgage), finally they may end up with gains. short sale (buy high and sell low) is not their choice, is a losing game. So never put yourself into a losing game. so does trading!


if you choose to buy stocks in cash, like buy in at 2008/2009, just buy those safest, like index etfs, such as qqq, iwm, sso, ...they all doubled and more. even if you bought the highest before the crisis, so what, now they are back, you are winning!

CASH is the KING! you have power to be patient, you have the power to be well disciplined, you have the power to stick to your own plan!

 

Aaaaaaaaahhhh.... this speaks volumes... and provides much more clarity for me now.

And I am not being facetious/condescending/smart ass..etc.. I sincerely understand now the differences between our styles.

For me- candlestick knowledge is everything-- nuances of candles that took me two years approx to decipher.

 

This may be the most comprehensive post of bad advice I have ever seen... on soooooo many levels that my head is spinning on where to even begin...

Is this meant to be some kind of sick joke trader?

 

Daring... seriously.....???

C'mon-- you should be able to see right through a post like this...

"vehicles which don't require stop loss" LOL... just when you thought you've seen and heard everything....

Ammo knows what he is doing-- stick with him....

 

I don't judge or assume anything, just make sure I understand the discussion as I am very open minded, it's never my way or the highway. Especially in trading.

 

A vehicle that doesn't require a stop loss? Do you seriously think that exists?

This is equivalent to someone saying-- "you've got to find those areas on earth that don't have gravity".... and then asking "can you be more specific on those exact locations?" LOL