Like yourself, I am not necessarily going to change my point of view based on what other people say (while in a trade), but there are times when exchange of quality info comes very handy. I track your levels here and when they merge with mine it adds clarity to my levels. There are times when one has a long signal, another one has a short signal and the third has no signal, no doubt that this is the time of lower/average probability. Remember I mentioned to you before about having an entity of perhaps 3 strong traders combining forces and 1 strong signal is derived from all 3 traders at the same time, well, that should increase the odds substantially. I've realised that when I used to daytrade divergence based signals, if divergence starts in 1 min TF, followed by 2,3,5,15 results in a lot more traders noticing the divergence formation and reacting to it.
To decide whether or not averaging down is a good idea, one must first define what a losing trade is. Many traders feel that a 1 or 2 point loss is a losing trade. This is a common fallacy amongst newbies and underperforming traders. The trader who allows for noise and takes the big money off the table each time is the trader who will be in the game for the long haul. A losing trade is to be defined as one that loses more than 2 percent of total liquid net worth. What this means is that an underleveraged trader (and by the way, that is the way to trade), can average into positions until the point past the reaction low/high that has been determined as the get out point. As long as this averaging does not lead to a loss that is greater than 2 percent of total liquid net worth , then it is acceptable to add positions. In fact, it would be unintelligent not to do so. So, in summary, it's all a matter of what is defined as a losing trade. Calling a trade a losing trade without it violating the recent reactionlow/high is wrongheadedness at it's finest. Romik is correct here and actually couldn't be more correct. I have been averaging into positions for nearly 26 years and this is the way pros trade. Note: If you have a 5k account and are averaging in, then you need to stop trading or go to trading 1 lot of corn., which is where a 5 k account should be.
Totally agree. Even if you look at your stock trades. The combination of my method and your divergences appears to be working very well together. Than you add 5P's method and bingo you got it. I love the exchange of ideas from everybody on here. It helps me in my trades as well.
Actually it is the same there as well. If your analysis of the intraday chart says go long, then you average in during the day. Until it breaks out of the reaction low and not by one tick but by an amount that you have determined is where it's a bonafide reversal.
On a slow ES day like some of the ones lately with only a 4 or 5 point range you will be averaging all day long and waiting for nothing.
If your analysis says goes long, then that means you think the price will rise. Why would you only take a quarter position if you think it will rise and then be forced to pay a higher price when your analysis turns out to be right ?
It's patience and humility that have you taking the small position intially. --both good traits for a trader to have.
That's ok. On a 4 or 5 point today, you would most likely only be getting 2 points which is a defeatist target. Sounds like that kind of day would be nothing anyway. (One of the reasons I don't day trade the ES anymore).