I don't mean to be crass here, but I think it sucks and can get people in over their heads before they realize how deep into the rabbit hole they have fallen. At what point would you say the averaging down no longer works, and the ship must be abandoned?
You are not being crass at all. Great question- one needs to know their max position size prior to entering the trade. Say you want to trade with 5 contracts. Rather than enter all 5 at once, you scale in one at a time. Jessie Livermore taught to test the market with a small position, then if it goes your way, start adding to the position up to your max size. Same thing for averaging in as the position goes against you. Many pro traders trade this way despite what the unknown, frightened, internet sleuth tykes may claim. Truth is, despite what the anonymous elite masters may say, it is impossible to time the market exactly. Averaging spreads the price and time allowing your forecast to become reality. surf
This is the problem I have with that idea. The problem is the exponential gains (or losses) of scaling in. For example, if your trade is winning and you average up, then it will take less of a move down to reverse your profits. Likewise, if you average down, it will take less of a move up to increase your loss. I messed with this idea a year or so ago, and found that it seemed too risky a way to do it, unless one had a very sophisticated way of hedging against that averaging adversity. Else you'd need substantially (and exponentially) more money in your capital account than you may have been prepared to dedicate. I personally don't like the idea on it's own, unless the afore-mentioned hedge could somehow be made manifest. And if a hedge is required, why the need to average in in the first place? It seems very complicated.
Ofcourse, you are correct. However, provided that we function in reality ( something many wannabes and ne'erdowells do not do) fact is its impossible to time the market to any degree of exactness, therefore averaging in with a plan, makes sense despite the inherent flaw you point out. surf
I want to point out something here. The community you are engaging with don't believe a lick of what you proffer. And I am not condoning anything you do, either. I think the idea of averaging in is a dangerous concept to be promoting here to people. It would cause many folks here a lot of pain and misery to realize it can be a VERY BAD way to trade. I tend to wonder if you remember your audience. Not all of us are super-wealthy enough to take 10-digit drawdowns (if needed) in a day. As a whole, and at-large, the community here still does not like you, Mr. Surf. And you are not showing that you are feeling compassion and sensitivity for the smaller folks here. What makes a good teacher a great one, is one who can identify the needs and wants and ABILITIES of the entire audience they are addressing, not just the ones they wish to appease and appeal to. I say this because I think the average person here cannot follow whatever system it is you are promoting, and let's face it...The mental momentum of reaction to your posts is negative. It is not because, as you may claim, "they are monkeys", but because they all see a flaw in your methods and they are rising up to make a call over an average decibel level about it. I for one am still not convinced you are being genuine, holding the community's best interests at heart. We are the cops, you are Lebowski, and Malibu is the ET community. We'll be keeping an eye on you, Dude.
Keep an eye on me??? Whoa, i am flattered as long as you are over 21. Hmmmm, i deduce you are from the educational community from your post? i respect that, in fact, a very close family member happens to be a PhD professor. What you need to understand is marketsurfer has been here since 2002. Far longer than many of the haters-- i have numerous emails and a few PM's supporting my "reality based" ways to approach the market. A few of these are from major players who are avid readers of mine. In fact, my ideas have been so accepted-- i was hired by the CEO of a major sponsor of this site to write his Client letters etc. i no longer do so, so i am ok with letting this bit of info out. Not to mention, i have raised capital into the 8 figures from relationships I have made on elite. So, clearly, im doing something right. So i pay little mind to the jokers haters and other assorted ne'erdowells. I am paid for my ideas, they are not. with that said, you are missing the point about controlled averaging in with a pre-determined max position. It has nothing to do with being wealthy or able to take huge heat. Its all a function of position sizing in relation to your capital. One of the biggest mistakes that most people make is clinging to the excuse that the time isn't quite right to take action. Well, let me tell you something: In my experience, conditions are never right at the right time. The timing is always wrong. So if you're waiting for everything to be perfect before taking action, you have a foolproof excuse for never taking action. Robert Ringer surf
I shall try to not belabor this point any longer than it needs to be... You are now speaking about yourself in the third-person? Not sure what to make of that. And no, I am not "from the educational community". I hold no degree from university. I did not receive a proper, upright and spritely education from a higher school of learning. I am like Zaphod Beeblebrox; "He's just zis guy, you know?"
Well clearly you are self educated then-- Allow me to explain, ms. Marketsurfer is a character, like in a movie. Jeff Bridges really isn't really Lewbowski and DSG really isn't marketsurfer-- its a character. Yah, i have the balls to mix my real name and businesses here. Ever wonder why the gonzo hate vibing surf report posters NEVER reveal their real names? Everyone here is a character posting under fake names. I have met many people from elite, guess what, not one hater ever. Wonder why?? It is not hard to figure out why. Think for yourself, dude. ..... surf PS. Send me your mailing address-- ill send u a copy of the book for free. Then u can make your own decision about it.
I hosted surf fests for 5 years in NYC with an open invite for all of elite to attend. Never had an issue, despite a few threats. Most of the community are good peeps in real life even the nastiest online personas