Adding to a winning position..yes
Adding to a losing position..no
If it's a loser you're wrong. Cut it and wait for a better trade.
Doubling up is avoiding the fact that you're in a bad trade.
At what point do you stop averaging and when will that loss wipe you out?
Here's one for the theorists and book readers and the bone-head regurgitators.
Q) Is Averaging a good practice?
Please, share with us your thoughts and feelings about averaging.
Ok, so as soon as the trade goes against you, your target price immediately becomes invalid?
All the books say averaging down is a big no no (well, all the ones I have read), but personally I wouldn't not do something just beacuse someone told me I shouldn't. Although I don't average down nor do I intend to, I don't see why it couldn't become a part of a strategy. Say if someone risks 2% capital per trade, they could first enter risking 1% and if the trade initially went against them they could later enter with the other 1% so long as the reason for entering that trade still remains. You just have to be aware of the risks I think and you have to be sure that your reason for entering the trade still remains and you are not just trying to make back losses...
Sam.
Perfectly valid strategy...if you believe in mean reversion.....although adding at equal intervals would be a big mistake.....price moves in parabolas...and so should add points.
and deffo no martingale
Dynamic grid over price action
Why not martingale? Would you average down using just PA?![]()
This works 9/10 and was the strategy I used in the ETX Capital 'Beat the Broker Comp' and managed to turn £20k into £150k in one day. Great fun, however, I blew up my account at least three times before I achieved that and had to hit the 'reset' button to return to a starting balance of £20k. Sadly, in real life there's no reset button and the risk of disaster is huge. The reason being that every once in a while you get caught offside by a runaway trend and the losses mount up exponentially. However, averaging into a position that has corresponding stops which, if hit, collectively only result in a loss of x% of equity - strikes me as being fine and has definite advantages. I've explained my thinking in greater detail in post #5 of this thread:Perfectly valid strategy...if you believe in mean reversion.....
There is no need of martingale if you utilize a dynamic grid....patience is a virtue.
This works 9/10 and was the strategy I used in the ETX Capital 'Beat the Broker Comp' and managed to turn £20k into £150k in one day. Great fun, however, I blew up my account at least three times before I achieved that and had to hit the 'reset' button to return to a starting balance of £20k. Sadly, in real life there's no reset button and the risk of disaster is huge. The reason being that every once in a while you get caught offside by a runaway trend and the losses mount up exponentially. However, averaging into a position that has corresponding stops which, if hit, collectively only result in a loss of x% of equity - strikes me as being fine and has definite advantages. I've explained my thinking in greater detail in post #5 of this thread:
http://www.trade2win.com/boards/first-steps/50724-rediculas.html
Tim.
Would you say this could also apply to the martingalers?
Personally, i'd look for volume exhausting on the higher TFs. I agree with what you say about not hitting it at regular intervals though, but doesn't that almost equate to martingaling in?:?:
Martingayle is a bit different because your doubling your stake everytime. Which must make it very hard to stick to only trading 1% or 2% of your capital which most traders follow. I actually think Martingayle is a great strategy if you had enough money to cover all potential losses, but if you if you had enough money to cover all potential losses you probably wouldn't need to trade with it. Esentially it increases your risk. Also depends on how you use it. For example, you could say that for every 500 points the FTSE100 goes down I'll enter another up bet doubling my stakes. Say its at 4000 now, can only go down by 500 points 8 times potentially, so as long as you had enough capital to double up 8 times then you could do it.... but thats not gonna get you great profits. Didn't you live in Thailand last week Paul71???
Sam.
Also...you could introduce another dynamic...a hedge of some sort perhaps