thread: Averaging when already In the RED....

Yes, when the position is built and moves to the desirable direction, you are automatically averaged UP by as many places as you have averaged down. Further places will (or can) be inserted and each will have its own trail in order that only the last in the sequence can lose.

regards

Average up, average down, martingale or whatever name you call it.
As long as it works, then it is good system.

I average out. I average in but only as the price moves in my direction and not away from it at the hope of mean reversion. I don't know of a single trader who averages down. Jacko, Jim16 and several mentors of the exact same stature in this forum have said its much better to take the loss. I often agree with my expertise.

I remember once saying gj went in one direction by 800 pips without retrace, there was a thread about it where traders were using some type of a martingale egy. Most of them got screwed.

I attempted averaging back on vhands it worked well for about 8 months and then came the inevitable conclusion

I think the way you look at it averaging down is a recepie for disaster more so in fx as tendencies are quite powerful.

Only didnt work for me I can't justify throwing good money after bad thinking things will turn around.

This is only my personal opinion. At the end all that matters is that the money you rake in irrespective of the method you follow.

I remember once saying gj went in one direction by 800 pips without retrace, there was a thread about it where traders were using some kind of a martingale egy. Most of them got screwed.

I tried averaging down on vhands it worked well for about 8 weeks and then came the inevitable end

I think the way you look at it averaging down is a recepie for disaster more so in fx as trends are quite powerful.

Its all down to controlling your risk.... like always. In case you have a possitive expectancy and can controll your risk then there is absolutely no issue.

Hello, did not say I find entrances difficult to pinpoint I said I put priority but some of the time that I do scale out.

Can you scale out aswell?

The reason I ask Is because in the event that you find entries hard to pinpoint then It will be simpler to choose a fantastic exit.

Fugly,

there's a difference between'construction' a situation and throwing good money after bad as you place it by maintaining a dead position alive.

Before the start of a major directional move (or trend), there's usually a preceeding period of indecisiveness. That period can be many 100 pips in range (based what the most important TF is you are looking at).

Since the trader doesn't know the precise time of this impending move, he has to place himself egically to gain the best typical entry for the whole planned place. In my experience won't just happen by adding to the position after your way has moved - you create a average by taking advantage of changes in the range which are initially not in you favour.

As previous posters have pointed out, it must occur in a really calculated procedure in order not to overleverage, and it's all depending on the planned overall size of this situation.

regards

When the price gets of the starting blocks far enough, I route, if not - well, I have enough book to escape even at worst.

DT - nice averaging. But you can get out a b/e at worst?
Say in your eg, you've divided your risk into 4 orders:
two limit buys under, two stop buys over.
If from that position price goes down and past your limits into the red, do you then use the 2 cease buys part of your order (which haven't been triggered) to'escape' the losing trade?

DT - nice averaging. But you can get out a b/e at worst?
Say in your eg, you have split your risk to 4 orders:
2 limit buys under, two stop buys over.
If from this place price moves down and beyond your limits to the red, do you then use the 2 cease buys part of your order (that haven't been triggered) to'escape' the dropping trade?

Triphop,

I do not know beforehand in which order the entries will be piled. I take my first entry at market and put the limit/stop according to wherever the price moves . So for example there could be one market order, one limit order under (if long the market) which might never have triggered because the market takes off in my path from the beginning and I continue adding on the way upward.

When I put in at market along with the price immediately moves against the desired direction, I might place just one limit order further below in order to judge if my thought still holds - I have enough firepower to let it drop to support amounts which where I could decide to enter another order at market to rescue the transaction possibly in the half way mark.

I don't know how far away I am when I think its time to build a position - but that my order size in that point is small enough to be incorrect and still come out ok while when I'm right, the last amount of gathered small orders (that IF I'm right will be trailed), constitute quite a chunky spot in my favour - with just the previous increment likely to shed.

regards

Here are the last 3 positions I am building since the start of the week.

Currently up by 2.4%, worst DD was at 1.2% and trailing most orders .

regards

Thanks DT, much appreciated. I mostly trade swing timescales and I've been on the lookout for ways of improving entry (I'm currently one shot type of trader), and this seems just the job.