I been ave down for years be it scalping to very long term stocks/commodities. Most talk about winning percentages but I don't, I concentrate on keeping low losing percentages. Matter of fact I design models to be able to get out of all entries at breakeven plus one tick, so if system entered at minus 4 ticks and out at plus one tick on original entry, made 5 ticks. I took a gentleman, Jim, last January who been losing for years, people's lives fascinate me sometimes especially if they willing to overcome personal challenges outside of trading, so he be spending next 2 years to change his previous misconceptions of what price action means before to how I view it. So after 5 months, his losses are 0 to 2 per day trading stocks on dozen to two dozen signals and even that is too high. It is not how to manage a trade first that matters, it is taking a trade where price is screaming to not to be taken at all. Jim is last guy I mentor. Very time consuming and I am at a stage of life of having built resources so I can travel and do activites only dreamt when learning about price action. Managing of a trade is based on constant risk as I view it, time management, strength of trend, S/R all are studied till becomes like breathing. Memorizing is constant before the market, during and after. And yeah, my hugest scalping losses been cause I ave down, nothing like tossing 7 figures, but eventually new equity highs after months. I don't recommend most to ave down, but I love being able to overcome my challenges. Longer term I hedge, so if systems can't find enough hedge ideas, trade don't get done, I seek to buy very low and sell very high, but you better be able to keep overall losses very low percentages.
hold on its buy 1 2900 1 2897 1 2894 1 2891 mkt goes to 2890 then drops to 2887.5 then back up avg price was 2895.5 so max draw down was 8 x4 x50= 1600 if we get out at profit at 1.5 ptsx4 = $300 =2897 4ptsx4= $ 800 = 2899.5 where we entered 2900= 4.5 pts= 900 so if it comes back to where you entered you are good. to get a risk reward of 1:1 you need to make 1600 so 1600/4= $400 or 8 pts. so avg price plus 8 points x4 = 2003.5 = $ 1,600 profit. but what if you bought just 1 at 2900 and it went to 2887.5 then to 2003.5 and u exited -625 max draw down. max gain 3.5 x50= 175 dollars profit. in order to get a 1:1 you need $ 625 profit so 12.5 points so 2900+12.5= 2912.5 to get a 1:1. we needed 12.5 points retrace for 1:1 on the add we needed an 8 point retrace. thats only a 4 point difference with a lot more risk!!
The doubling and tippling caught my attention, that is martingale. Not trying to knock volpre, and I'm not even saying you cant trade well with an average down or up strategy. Just not really getting a lot of things he does. But thats fine, I'll check out the journal
"... Look guys I gotta go. Have company. bye..." He's practicing social distancing. Not in RL, but from us.
I have a couple issues with averaging down that I can't wrap my head around. If I take a trade based on some signal and it goes the opposite way, then I expect another couple pushes the opposite direction at the least, so why would I average into what I believe is a failed pattern? Wouldn't I want to wait for a double failure or for the opposite move to run its course if I dont want to flip direction? Another problem I have with averaging is, I take a trade because I think its a good location of where I want to be relative to the trading range or break out so why would I go in with small size (expecting to average) on what I believe to be an optimal entry point? That means your size of trade is growing as there is little left in the move OR your size is growing on a failed premise.
The bottom line is that volpri is trading size in the micros that most of us can only dream of. He's pushing hundreds on contracts per day to make his system work. He's averaging into dozens of contract lots. I believe I asked him once what he was doing last year, before the micros came out, and I did not get an answer. It was just out-of-sight, out-of-mind. So basically, he has a 7-8 figure account to make his technique work. It is either that, or it is all sim.
no you can do this with 2 or 3 lots he even shows he doing it 3 lots es. he isnt pushing the mkt around at all. quite the opposite he accepts the mkt pushing him around do long as it pushes back up to above his average but below his initial entry. thats the key. he isnt perfect but if he gets close he can eek out a small gain on all his contracts. thats all it is and you must know yourself to do it but there are much better and safer ways to do it but he doesnt realize this just yet