wha if we did a reverse pyramid where would our averge price be right now in the nq? wew will add 1 position every 100 points and we will add another lot every 100 points and lets see what this does to our aveage price.
nq lets say every 50 points you add 1 yes i have hindsight bias right now i know how much it fell so far but lets take a look 9.30 12225 then 12125 buy 1 then 12025 buy 1 long 2 then 11,925 b1 long 3 then 11,825 b1 long 4 then 11,725 b1 long 5 where is your averge price and how much are you down?. average price is your average price is 11,925!! mkt is at 11,791 so you are now down 11925-11791= 134 x5=670 points x20 = $ 13,400 and you need to get all the way back to 11,925 to break even again you are trying to get to break even. if you are in a trade and hoping or trying to get to break even then just exit and start over! what is the mid level of the market range today right now this is a rough estimate ok 12225-11726= 250 points so 12225- 250 = 11,975!!! Omg what is our average entry price with all of our adds? 11,925 so we are looking for a 50 % retrace to profit and that is it when we should be looking for that retrace off of the bottom not the average this is why adding to losers is folly and a road to ruin. 12125 buy 1 12025 buy 2 so long 3 11925 buy 3 so long 6 11,825 buy 4 so long 10 11,725 buy 5 so long 15 total what is our averge price on 15 ? 11,858 this is lower than 11,925 but not by that much so we must chagne the model and this is why a discretionary exit and add doesnt work you cannot play with the numbers with any regularity becasue there is no consistency but lets try a new way instead of adding a 1 lot lets do 1 on the next one then 3x on the next and see what happens 12125 buy 1 12025 buy 1 long 2 11925 buy 6 long 8 11825 buy 6 long 14 11725 buy (6x3) B18 plus 14 = long 32 what is our averge price now? 11,803 that is our average price and we are downhow much based on the original adds? not that much really we are actually in a profit now you can do a spreadsheet analysis of all of these positions and base it on todays moves and you can then see where the max drawdown was and analyze all of this to get the best adding method possible based on what cycle and where you think the market is but just senselessly adding 1 and adding 1 and adding 1 doesnt do much for your average price which ends up looking like everyone elses average price. trust me you and volpri are not the first people to realize that adding to losers in a bull market can make you money if the bull continues.
9.30 12225 then 12125 buy 1 then 12025 buy 1 long 2 then 11,925 b1 long 3 then 11,825 b1 long 4 then 11,725 b1 long 5 where is your averge price and how much are you down?. average price is your average price is 11,925!! mkt is at 11,791 so you are now down 11925-11791= 134 x5=670 points x20 = $ 13,400 and you need to get all the way back to 11,925 to break even again you are trying to get to break even. if you are in a trade and hoping or trying to get to break even then just exit and start over! here are our 3 examples mkt is at 11,791 at the time of this analysis lets see how these shake out? 1. adding a buy every 100 pt s= down 13,400 bucks total/5= -2,680 per contract 2. adding a doubleevery 100 = 11,858 avg on 15 - 11,791= -20,100/15=-1,340 per lot 3. 3 x adding every 200 pts = 11,803avg on 32=11,803 -11791= -7,680 wow! look at this number it is actually less loss than the 5 lot !! and per contract it is 7,680 negative /32= -240 bucks a contract that is it you are down 240 a contrct now any retrace higher gets you into profit but sure you have more total risk or do you? how far for it to fall to be equal to the max risk of all of our models? which was 20,100? well 20,100 /32= 628 dollars per contract /20 =31 points so take your average mMINUS 31 points 11,803-31 points = 11,772 at this point you are as bad as your second strategy and none of this means you will make more money because it depends on your yea you your ability and skills to make money by betting on the correct direction of the trade!! over and over and over
this is exactly how LTCM and most other huge trades blow out they just keep adding and adding and adding hoping that wow.. all i need is a 10 point move an im back to break even back to good again but a 10 point move in the other direction with TREND mind you will DOUBLE THEIR LOSS!!!!! at the point where they are down the most!
depending on your time frame your time slice what you do and when you do it that is how you figure out or OPTIMIZE what style of adding will work best for YOU this is all about you and your trading and this is why guys that are successful will use systems to tweak this kind of stuff because you cannot tweak a DISCRETIONARY system of ART FORM technical trading and expect to not have HINDSIGHT BIAS i had it big time even in my examples because i already know where the market started and ended in so far today! VOLPRI you have a great journal and some great ideas and you have a great read on the techincals it looks like and gret for you but many who follow you are clueless about the fact that it is your cumulative skillset that is the difference between winnign and losing and not ADDING TO LOSERS. that is all i am saying and have been trying to say this whole time if it makes VOLPRI money that is great for him
Irrelevant. You'd not be able to average down that deep on NQ without some serious cash in your account. By 11925 yer in trouble. Remember, about 16K per contract required for entry. 16K x 8? Do the maths. You'd want high 7 figures in your account to even contemplate doing the above.
You just outed yourself as a non-trading troll and you won't even be able to figure out how you did. Why not go make yourself your own journal and leave @volpri's to his own?
The ideal would be to add the winners for example buying 5 contracts, then 3 and then 1. (But for that you need a good trend, something that does not happen many times in the indexes) But we usually do just the opposite by adding the losers, we buy 1, then 3, and then 5. Then the price does not go in the desired direction, we do not admit the error and inevitably the account explodes. Thats the big problem.