DislikedI understand the math I just don't think it will ever continue in the same direction for 20 trading days without a big enough retrace for me to make my 50 pips.Ignored
29/09/2008: buy @ 194.620
30/09/2008: buy @ 187.670 / average 191.145, tp = 191.665; daily high 190.960
01/10/2008: buy @ 188.990 / average 190.427, tp = 190.947; daily high 189.870
02/10/2008: buy @ 187.450 / average 189.683, tp = 190.203; daily high 188.080
03/10/2008: buy @ 185.120 / average 188.770, tp = 189.290; daily high 188.460
05/10/2008: buy @ 184.770 / average 188.103, tp = 188.623; daily high 185.740
06/10/2008: buy @ 184.600 / average 187.603, tp = 188.123; daily high 184.830
07/10/2008: buy @ 176.980 / average 186.275, tp = 186.795; daily high 182.000
08/10/2008: buy @ 176.870 / average 185.230, tp = 185.750; daily high 178.920
09/10/2008: buy @ 171.760 / average 183.883, tp = 184.403; daily high 176.380
10/10/2008: buy @ 168.610 / average 182.495, tp = 183.015; daily high 172.090
12/10/2008: buy @ 172.840 / average 181.690, tp = 182.210; daily high 173.410
13/10/2008: buy @ 172.600 / average 180.991, tp = 181.511; daily high 179.110
14/10/2008: buy @ 179.030 / average 180.851, tp = 181.371; daily high 181.350, tp missed for 2.1 pips (not counting spread)
15/10/2008: buy @ 176.690 / average 180.573, tp = 181.093; daily high 178.680
16/10/2008: buy @ 170.740 / average 179.959, tp = 180.479, daily high 176.230
17/10/2008: buy @ 175.800 / average 179.714, tp = 180.234, daily high 176.510
19/10/2008: buy @ 175.810 / average 179.497, tp = 180.017, daily high 175.290
20/10/2008: buy @ 175.820 / average 179.304, tp = 179.824, daily high 179.180
21/10/2008: buy @ 175.260 / average 179.102, tp = 179.622, daily high 175.550
Price closed @ 165.330, almost 3000 pips below the first entry.
The problem with this kind of averaging is the weight of the old positions. If you don't get in profit quickly, the position becomes heavier, the new positions offset the average price slower and you need bigger retraces to end up in profit. That's why you should have some kind of limit, a point where you accept the loss.
Just for the record, three days later, GBP/JPY reached 138.990.
And just one more thing... let's assume you sell instead. You're probably going to collect several times 50 pips by having 50 pips TP and no SL. But... what if you had it the other way around?
Best regards,
Barbossa