If losers average losers, then I am a loser
Averaging down is how I scale into a position.
Once or twice a day, someone is driving the price to a certain level and then ripping their orders from the market and then jumping in on the reversal. That is market mechanics.
Its a personal preference, as I find that a lot of times I am waiting for just that right moment of reversal, and then miss it initially when it happens. Through averaging down, I see it in hindsight, and then am already holding my position, where I would have wanted it to be.
With fifo, this lets me close my 'worse' positions for a profit first, and leaves my best position running (not that it matters, other than psychologically).
Losers average losers is bullshit.
Losers follow other peoples' advice about trading, that's what it should say.
When scaling in you have a predefined exit point for your positions. When averaging down you don't have such a thing and would average down until the market turns or your account is depleted.
Don't know what the fifo rule has to do with it, since that only affects the brokers - not you personally. Your profits and losses will stay the same no matter which rule is used on the broker's end.
I think it can be specifically useful, scaling in, when price is near several closely grouped s/r levels, as you can kind of feel out how far into s/d price will go.
Ah not this shit again... thanks Tudor...
This has truly been discussed ad nauseum...
The message is a clear one if not subjected to mental masturbation... have a maximum risk amount in mind when entering a trade and don't talk yourself out of it....
It doesn't matter if you scale or average.... (tudor does these things quite frequently in his infamous vid). The point is to listen to the market when it has proven your trade idea wrong and to take your loss.
Hence the losers average LOSERS
First it has to be a LOSER for losers to average it. So yes if you continue to add to a trade which has went past your maximum risk and/or invalidated your reasoning for taking the trade then yes you are in fact a LOSER
thanks for clearing it up. must have had a mental block.
I don't average except in my carry trade account. However, I'm not one to bash people who average a loser because I don't know what the specific objectives/goals of the other trader are. Nor do I know how much money they are working with or what time horizon they are looking to have their goals met.
Now if you are trying to make a living off trading forex on a week to week basis, then I think averaging in is not the best approach.
I didn't realize the term 'scaling in' existed. Thanks guys. Sorry for the terrible thread lol
just because we all have google now, everyone has an attitude. i like interacting with people. people can get to know me better, and where i'm at as a trader if I share my questions and opinions.
it's called the human experience. you ask questions and learn.
Averaging down is risking 3%, prices moves against you so you take another trade at 3%....
Just as an example...
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