Averaging

Hello All,

I am curious if anyone here besides me uses averaging frequently? When there is daily technical analysis as well as fundamentals supporting a positions... do you average after drawdowns? Down 70 pips? Down 100 pips? Instead of getting out of a position and then feeling the strain of trying to time an entry? Dont get me wrong... look for a good entry, but if you dont get it stick with the order by creating a better one through averaging.

If so .. how do you average? 1 lot, 1 lot, 1 lot or do you go 1 lot, 2 lot, 3 lot?

I am interested in feedback. I dont see much discussion about this on forums.

I would like to completely wean myself off averaging but it seems to be taking me a while.

I have however, managed to get to the point where I only average into trades where I will earn interest on my positions. In my mind I then look at it as an investment while I wait for the price to come back to me.

Since I only deal in micro mini lots at the moment, my stops are fairly substantial so hitting them has so far not been a problem. I figure that after trading live like this for a while, I'll at some point get over the urge to average myself in.

I average up. Case in point -- I closed my GBP trade today for 290 pips. The true, averaged up pip count was 130...

Averaging down is asking for disaster unless you define criteria before you enter the trade.

Good job Mr Trend: I have a sign on my desk that sums this subject up pretty well:

Losers Average Losers
Winners Average Winners

See you would think so. Though this is how I approach averaging. I enter say EUR/GBP which total 365 range is 420 pips or so. I leave room for 5 averages if needed (worse case scenario), then I do not need to worry about taking a loss.

My profits will be smaller on my "GOOD" trades that I dont need averaging, though if I dont take a loss it makes up for it.

Thanks for the reply,

Here's a little story I posted sometime back:
http://www.forexfactory.com/forexfor...ead.php?t=6709

I average both ways. Averaging up is frequent for me but only once trend firmly established. This could be over months.

Averaging down is a completely different game and done incorrect can be nuclear to an account. The only time I average down, is when I am absolute certain that the market has reached the bottom. Or rather I believe that the the market has to turn around for fundamental reasons would be a more correct way of explaining it. For example it might be a 6 month low, or a year low. The interest rate cycle may have reached a peak, there could be temporary shocks to the system that present opportunites to buy in at a lower price. I should explain that because I trade over months when opening a position its nigh impossible to pick the exact point when markets will reverse so I would open multiple positions over a period of time (and this is where I would be averaging down most of the time). Averaging down on the basis of daily low, or hourly low isn't worth the risk reward ratio to me.

averaging at forex are forbidden

We ought not to break rules without proper knowing why we should break them

Too frequent averaging are hardly reasonable