I suppose. I have another answer to that "for those new folks reading it", but I'll keep it to myself.
Averaging down is a bad idea because you are increasing the size of a position that is already losing. How exactly is that a good idea? It is true that you have brought your average price closer to current market , but i will pose this question (especially for those who argue that they do not know where the market will turn, so they break their position up, it is their 'strategy' or they are 'averaging in'. Note: you are either averaging down or averaging up): Is it better to stop out on 1 ES contract, for example, or on 2 ES contracts? The answer is obvious, that is another reason why averaging down is a bad idea. The idea should be that when you lose, you do so on minimal size. Averaging down does not allow that. The idea should be that when you lose, you do so on minimal size. Averaging down does not allow that. The simple truth is, is that those that advocate averaging down have this sick perverted idea that they know what will happen next. And that isn't even considering things hitting the market randomly while in a trade, like a Trump tweet. You should be thinking about how you can lose the least amount possible, while giving yourself the opportunity to make the most amount possible. And the only way to do that, is to average up and not down.
1) good idea..yes 2) yes because I rarely get stopped out a 2 contract but multiple stopped outs on 1 contract. I had rather take an occasional 2 or 3 or 4 or 5 contract loss with MANY 2 or 3 or 4 or 5 or 10 winners than a bunch of 1 contract losers. 3) when I win, which is MOST of the time, I am winning on max size with something I bot cheaper and cheaper. Or sold at higher prices waiting for the drop. I don’t care to lose multiple minimal 1 contracts just to make sure I am losing minimal amounts which is what most of the loser gurus advocate...LOL that is guru nonsense that doesn’t work in the real world of trading so that is why they are guru’s. Most can’t trade and are lost as a termite in a yo yo. 4) the idea should be that you win, you win alot, and when you win you are winning on max amounts. Averaging down enhances that for me. 5)the truth is that the 1 contract traders have this sick perverted idea that they know what will happen next and so they hold until they are proven wrong by taking one loss after another and then resort to revenge trading whereas an average downer trader like myself doesn’t believe they know for certain what the market will do but he is willing to enter on positive traders equations that show the odds of winning and he is willing to buy more or sell more as the market proves him to be wrong in his initial entry but right on the overall direction. 6) I never listen to Trump tweets or Fed Tweets or anyone else’s tweet so I am not relegated to trying to figure out how the tweet or news or opinions will affect price. The chart shows me all I need. And I can reverse on a dime if the market indicates I need to. I have no reason at all to hold onto massives losses ....HOPING.
Averaging up DOES NOT WORK WITH SCALPING A REVERSION TENDENCY INSTRUMENT. HOW MANY TIMES I GOTTA SAY THAT? DARN!
Oops your right. Disclaimer: Averaging up can and may very well cost you alot of money. You can actually lose more than you have if you try the technique with scalping. So be warned. Averaging up is RISKY. Talk to your guru’s when it doesn’t work on reversion biased instruments. Maybe, just maybe, they will refund your money for their erroneous course and concepts BUT don't count on any refund, as most are probably losers, and have nothing to refund. They have probably ALREADY lost your course purchase price in the markets.
You've mentioned this term a few times. What is your definition of a "reversion-biased instrument" on the CME, and which instruments do you see as reversion-biased vs. non-reversion-biased?