Agree. To average down can be profitable. As it can blow up an account at the speed of light. One can average down without being unreasonable. But it's foolish to average down for avoiding a loss at all cost. It's foolish to average down when we know we're on the wrong side. It's foolish to average down when we're already over leveraged. Well ... As often with trading. Not everything's black or white.
What's sure is that losers quote masters without trying out for themselves. You'd be surprised that even Tudor Jones is often too early or too late.
That's a reason why traders fail. They want to trade. Trade too often. Whereas trend following is a lot of sitting. Then they buy the top. Because they wait ... Wait for the third pullback (Third move) + Confirmation. Market Surfer might have forgotten that speculation is forward. One has to anticipate a trend and not to embrace the one backward.
I analyze volume/volatility to the Nth degree to conclude if price action is more likely to breakout or revert to the mean. That's mostly what I do...never try to determine if a trend exists or not. At the end of some trading days, I look at the charts to see how much the market trended because I was oblivious in real time. Anyone else have a methodology that does't require trend/range/chop interpretation? Just setups that work depending on the "push" or "pull" of the market in current time.
There is some correlation between volume and volatility. But one missing piece is liquidity. Could you develop a beat further about your analysis ? I don't rely on trend neither. But on potential which is a differential between order flow, liquidity associated with support and resistance levels. Since most trend are noisy, broken, ones ... I analyze market conditions at High and Low relative to previous ones and daily market / volume profile.
I'm ALWAYS INTERPRETING the DOM...if that's what you mean. I usually don't talk about the DOM because it's hard to explain what I'm looking for. What I do notice all the time, players want their limit orders to execute, so they put "fake" size on the other side of their limit orders to influence the market to "come towards" their standing orders. I only use support or resistance when trying for a larger profit than usual (may as well get out before a S/R level) or to place my stop. I NEVER EVER enter a trade based on support or resistance.
Sorry... I never intentionally enter based on support or resistance...many times I get a signal at S/R...just adds more confluence!
Still doing well with average down, actually it's getting better day by day, only a few small losing trades because there was no enough time, now I don't open new positions after 2PM, or even after 1 PM. I'm now good at catching the bottom (reversal or small rally), in most cases I'm right on the first buy and don't need 2nd one. Actually I don't like it, because with 100 or 200 shares the profit is minimal. When I had to average down 3 or more times, I would have a big win. The higher risk you take, the more profit you can earn. There will be big loss days, but there are big win days too. I'm prepared. It's amazing some people think other traders are losers even they know nothing about them. My limited trading experience told me you had to think out of the box, many well-known golden rules are b*s. I used to trade patterns, when the price breaks out downward, I panick and cut my loss, now I treat it as an opportunity. The trading becomes more enjoyable as well.
THINK OUTSIDE THE BOX...GOLDEN RULES ARE BULLSHIT...I love it! Only advice I have for you...are you going to be ready for the market when the VIX is over 20 for an extended period of time? When price breaks out, it's typical for it to RUN far longer than most anticipate. GOOD LUCK!!!!!!!!!!!!