I've been a prop trader for 11 years. 90% of the traders make money averaging and working their position adding contracts and taking them off as the position ebbs and flows. But we always have a hard stop on the day. You can either lose £1000 with 10 £100 losses and call yourself disciplined. Or risk £1000 on one averaged position, it ends up the same end result. Your win rate generally higher when you average but always need that hard stop.
This! @Tom Griffiths I really appreciate this comment. I have recently begun averaging down into my trades. Over last 50 trades my accuracy has been 95%. Granted some winners are small, but they still cover commissions and routing fees. Just today I had that one bad trade on IMRN at the close that flushed over $5 into the extended market. Because I didn't have a daily stop loss set I lost about $3 per share on that trade. Been thinking all night if this strategy is still viable and had just decided it may be, but I need a daily stop to cut that kind of loser - ruthlessly; period. Then I read your comment which confirms my idea and is very encouraging! Thank you for sharing this.
Your win rate is higher, but your gains per win are lower. It's risk management if used lightly, but at some point it becomes a risk on it's own. Nothing beats a good strategy.
1, understand the product you are trading. 2, when you decide to average down, have a few scenarios in mind and do what you said you will do. 3, review what happened and what you should do next time. Most cases, the hindsight is to flatten fast as it is the most easy way to trade. In summary, if the market is moving against you it simply means you are wrong and you need to get out or even consider reversing your position.
Never average down. This rule should be adhered to. Jesse Livermore told us only to buy more when the prices go up in the direction we plan for. If you want to average down the price, be patient to wait for the down-trend to end. When the down-trend is really reversed and keeps on going up, buy more.
Some trader friends say I carry my balls in a Wheelbarrow and some say am crazy, but the averaging strategy works great for me. It’s good to know the history of the currency pairs, what news is coming out and watch your signals. Don’t buy when the currency is at its highest level in five years hoping that its going to go higher. Just some ideas. Great video as always.
i only started making money consistently from forex when i started averaging down. now i dont even care about the quality of the first entry because i know i will make money by default like i always do no metter what will happen
As long as the fundamentals look good and there are no black swan events. There is really no reason to assume the price will drop in the long run. Prices will come back up at some point and you are back in business.
Focus on entry and you won't have to worry about averging down. Cut that loser fast. Focus and pataintly wait for the next entry. When you averge down, you tend to become more emotional involve in a bad trade, and it will make you blind to the good ones.
As a day trader if you use this technique well, it becomes part of your risk management strategy. Used wrong and you find yourself stuck in a position for days or even weeks. Or worse you have to stop out to free funds for better trades.
This is how I blown up my whole account 4 times in a row by not cutting loses quickly and averaging down until usually broker closed my position for huge loss due to run out off equity and trade on some leverage of course 😖 never make same mistake people please
Sorry but this looks like danger of using Margin and not averaging down in particular. Why would you use somebody else money to average down? What if you are not able to get out of the trade? I can't even imagine that.
I am an investor not trader and I save averaging down for when the whole market has dropped. More than likely , the whole market is likely to recover.. so if I’m a bit down on my diversified portfolio , I will usually just add the amount to each position that I am down, especially on already long positions that I trust. So even if it’s only 5 quid down or 50 (small but many stocks) I will give a little ‘boost’. Case in point, trump had a pop at China over the virus again today, dropped the whole FTSE down mostly at the same percentage across the board. All my shares are averaged equally with same money in each... so I chucked the same amount into all of my positions that dropped (all of em) to bump it. I get some more cheaper stock until the trend changes up. I would never smash loads in though, this is for the long term invest. Good luck all you trading lads, genuinely, we all trying to win the same game.
great feedback! i needed that. Morale of the story " Accept the Red and move on, Stay fresh for a fresh trade in the same or a different stock, but do not average. Put your Stop loss in the system carefully and then accept the outcome, even if it turns opposite to your view or expectations."
I'm a day trader, but I only trade instruments I believe in. As long as the fundamentals are good, there really is no reason to assume prices will go down in the long run. If I fail to catch the bottom of a downward move, which I usually do. I average down until hit the max position I will allow for that instrument. If I still get stuck, I will simply leave the position open until prices eventually come back up. The only loss you will experience is parts of your total portfolio being tied op which could have otherwise been used in a different trade.
finally a video about structured averaging, been searching for this for quite some time. i came upon this entry method as i did backtests on my strategies. seems pretty solid to me.
Nope, this is junk advice. The problem is that when you enter a trade in a good spot, you have no reason to add to your position and therefore only make a small profit when it reaches its limit. However, you're always guaranteeing a much bigger loss whenever a trade is going against your position. The only time anyone should add to a losing trade is if there is a new entry TO INCLUDE a new limit, treating it as a whole new, separate trade.
Always take the opportunity to sale back to the market on up days. Its not likely that the stocks are just gonna go straight down. Unless your gambling in high risk stocks. Stocks bought today can be sold back into the market tomorrow. Use the same money to average down take little profits where you can.
Averaging down based on percentage is a smart strategy, such as averaging down every 5% or 10% drop. Additionally, setting a limit on the number of average downs, like 3, 4, or 5 times, helps minimize losses. This approach allows you to continue trading with new positions and avoid getting stuck in an endless loop.
Great video. Like everything, when done in a proper structured way, depending on day type, instrument, context, real strategy, size, and places where additional limit orders put in place and not at random, with a proper overal risk limit where the whole trade will be stopped, this works very well.
Averaging down will make every losing trade worse, but it will not make every winning trade better. The only time I would add to a loser is when I get some kind of confirmation in the Chart that I'm still right! Don't just add to it, because price is still moving against your bias. Add to it when you see that buyers/sellers are still in control.
averaging down works on "averaged" instrument, ie, proper index funds or proper ETFs. Those who average down on fluff stocks and fluff ETFs are doomed.
Well if one is building a stock portfolio for dividends and the time horizon is long, then averaging down makes sense (assuming you did your home work on the stocks you own). I also agree that this is effective for index funds. Averaging down indeed doesn't make sense since the goal is to not hold a position long and to make profit in the shorter run.
👉 Trade with our Sponsor Broker: Trade Nation www.financial-spread-betting.com/ccount/click.php?id=95 Trade sensibly! 81.7% of retail investors lose money. 👉 We are seeking more contributors who can produce great video educational content about trading for our channel. If you think you have what it takes please get in touch by sending a message to traderATfinancial-spread-betting.com (remove the AT and substitute by @). 👉 It seems a lot of our viewers are non-subscribers. Make sure to subscribe to our youtube channel as we upload regular videos! If you hit the “Bell” icon (🔔) you will receive a notification on youtube every time that we upload a video on our channel. Bell icon hitters are super fans of our channel 🥰
Tenho trabalhado com uma combinação de estratégias, a saber, pyramiding, average down fazendo hedge quando necessário e usando stop gain sem stop loss. Meu stop loss é travar as perdas com o hedge, e sigo iniciando um novo ciclo com a nova tendência do mercado focando em day trade e swing trade no Mini Dólar da B3.
I started daytrading options recently I've been doing this strategy and I have 100% success rate I couldn't believe what I was doing was right so here I am looking for the worst case scenarios
Amazing approach about how to average down. Congrats. Really helpful because it's always hard to pinpoint the pivots or reversals. Besides, it increases confidence because you are not being stopped out everytime.
Because you never know exactly where a stock will start rebounding, so you make the first guess, then a second guess, and up to a fourth guess... and if that fails then you have to get out because it might be a full reversal or huge dump
Average down on long term is beneficial up until the position is too large. At the same time it increases your multiplier by number of shares. But to average down on a Day Trade? That may be Insane.
Averaging down is a good strategy especially for long term DRIP trading. Using it on FOREX is where I see the most danger. Even only buying 1000 units of a pair with this strategy can be detrimental to a decent sized account.
Nope, this is junk advice. The problem is that when you enter a trade in a good spot, you have no reason to add to your position and therefore only make a small profit when it reaches its limit. However, you're always guaranteeing a much bigger loss whenever a trade is going against your position. The only time anyone should add to a losing trade is if there is a new entry TO INCLUDE a new limit, treating it as a whole new, separate trade.
Averaging down is only sensible if you use it as a 'planned way' to enter your full trade. Doing it to get out of a bad trade is risky as you could easily end up in a situation where your biggest sized trades are your biggest losers thus potentially aggravating the damage (and you have no guarantee that the price won't go further down).
I've been a prop trader for 11 years. 90% of the traders make money averaging and working their position adding contracts and taking them off as the position ebbs and flows. But we always have a hard stop on the day.
You can either lose £1000 with 10 £100 losses and call yourself disciplined. Or risk £1000 on one averaged position, it ends up the same end result. Your win rate generally higher when you average but always need that hard stop.
This!
@Tom Griffiths I really appreciate this comment. I have recently begun averaging down into my trades. Over last 50 trades my accuracy has been 95%. Granted some winners are small, but they still cover commissions and routing fees. Just today I had that one bad trade on IMRN at the close that flushed over $5 into the extended market. Because I didn't have a daily stop loss set I lost about $3 per share on that trade. Been thinking all night if this strategy is still viable and had just decided it may be, but I need a daily stop to cut that kind of loser - ruthlessly; period. Then I read your comment which confirms my idea and is very encouraging! Thank you for sharing this.
Your win rate is higher, but your gains per win are lower. It's risk management if used lightly, but at some point it becomes a risk on it's own. Nothing beats a good strategy.
1, understand the product you are trading.
2, when you decide to average down, have a few scenarios in mind and do what you said you will do.
3, review what happened and what you should do next time. Most cases, the hindsight is to flatten fast as it is the most easy way to trade.
In summary, if the market is moving against you it simply means you are wrong and you need to get out or even consider reversing your position.
Never average down. This rule should be adhered to. Jesse Livermore told us only to buy more when the prices go up in the direction we plan for. If you want to average down the price, be patient to wait for the down-trend to end. When the down-trend is really reversed and keeps on going up, buy more.
You r so right
Some trader friends say I carry my balls in a Wheelbarrow and some say am crazy, but the averaging strategy works great for me. It’s good to know the history of the currency pairs, what news is coming out and watch your signals. Don’t buy when the currency is at its highest level in five years hoping that its going to go higher. Just some ideas. Great video as always.
i only started making money consistently from forex when i started averaging down. now i dont even care about the quality of the first entry because i know i will make money by default like i always do no metter what will happen
Yeah same here. When done in context, averaging down is a viable strategy. As long as lot size is small relative to account equity.
As long as the fundamentals look good and there are no black swan events. There is really no reason to assume the price will drop in the long run. Prices will come back up at some point and you are back in business.
Focus on entry and you won't have to worry about averging down. Cut that loser fast. Focus and pataintly wait for the next entry. When you averge down, you tend to become more emotional involve in a bad trade, and it will make you blind to the good ones.
As a day trader if you use this technique well, it becomes part of your risk management strategy. Used wrong and you find yourself stuck in a position for days or even weeks. Or worse you have to stop out to free funds for better trades.
Averaging down works very well for me
Do you buy the same number of shares or increase your share purchase?
This is how I blown up my whole account 4 times in a row by not cutting loses quickly and averaging down until usually broker closed my position for huge loss due to run out off equity and trade on some leverage of course 😖 never make same mistake people please
Ania29sl szym Has nothing to do with averaging down, it's your risk management which fails 😉
Sorry but this looks like danger of using Margin and not averaging down in particular. Why would you use somebody else money to average down? What if you are not able to get out of the trade? I can't even imagine that.
It all depends on your entry point , i made alot of money averaging
Use 1% of ur acc for averaging.
Average for every 100 pips for u to lose money, currency should fall down by 10000pips without retracement
You have the best videos on youtube concerning trading. Absolute fan, you talk from experience.
YOU HAVE THE BEST TRADING CHANNEL ON UA-cam, BY FAR.
I am an investor not trader and I save averaging down for when the whole market has dropped. More than likely , the whole market is likely to recover.. so if I’m a bit down on my diversified portfolio , I will usually just add the amount to each position that I am down, especially on already long positions that I trust. So even if it’s only 5 quid down or 50 (small but many stocks) I will give a little ‘boost’. Case in point, trump had a pop at China over the virus again today, dropped the whole FTSE down mostly at the same percentage across the board. All my shares are averaged equally with same money in each... so I chucked the same amount into all of my positions that dropped (all of em) to bump it. I get some more cheaper stock until the trend changes up. I would never smash loads in though, this is for the long term invest. Good luck all you trading lads, genuinely, we all trying to win the same game.
great feedback! i needed that. Morale of the story " Accept the Red and move on, Stay fresh for a fresh trade in the same or a different stock, but do not average. Put your Stop loss in the system carefully and then accept the outcome, even if it turns opposite to your view or expectations."
I'm a day trader, but I only trade instruments I believe in. As long as the fundamentals are good, there really is no reason to assume prices will go down in the long run. If I fail to catch the bottom of a downward move, which I usually do. I average down until hit the max position I will allow for that instrument. If I still get stuck, I will simply leave the position open until prices eventually come back up. The only loss you will experience is parts of your total portfolio being tied op which could have otherwise been used in a different trade.
finally a video about structured averaging, been searching for this for quite some time. i came upon this entry method as i did backtests on my strategies. seems pretty solid to me.
Nope, this is junk advice. The problem is that when you enter a trade in a good spot, you have no reason to add to your position and therefore only make a small profit when it reaches its limit. However, you're always guaranteeing a much bigger loss whenever a trade is going against your position. The only time anyone should add to a losing trade is if there is a new entry TO INCLUDE a new limit, treating it as a whole new, separate trade.
Always take the opportunity to sale back to the market on up days. Its not likely that the stocks are just gonna go straight down. Unless your gambling in high risk stocks. Stocks bought today can be sold back into the market tomorrow. Use the same money to average down take little profits where you can.
Averaging down based on percentage is a smart strategy, such as averaging down every 5% or 10% drop. Additionally, setting a limit on the number of average downs, like 3, 4, or 5 times, helps minimize losses. This approach allows you to continue trading with new positions and avoid getting stuck in an endless loop.
Great video. Like everything, when done in a proper structured way, depending on day type, instrument, context, real strategy, size, and places where additional limit orders put in place and not at random, with a proper overal risk limit where the whole trade will be stopped, this works very well.
Averaging down will make every losing trade worse, but it will not make every winning trade better. The only time I would add to a loser is when I get some kind of confirmation in the Chart that I'm still right! Don't just add to it, because price is still moving against your bias. Add to it when you see that buyers/sellers are still in control.
averaging down works on "averaged" instrument, ie, proper index funds or proper ETFs. Those who average down on fluff stocks and fluff ETFs are doomed.
Is averaging down more sensible when one has a genuine long (5+ yrs) time horizon?
Well if one is building a stock portfolio for dividends and the time horizon is long, then averaging down makes sense (assuming you did your home work on the stocks you own). I also agree that this is effective for index funds. Averaging down indeed doesn't make sense since the goal is to not hold a position long and to make profit in the shorter run.
👉 Trade with our Sponsor Broker: Trade Nation www.financial-spread-betting.com/ccount/click.php?id=95 Trade sensibly! 81.7% of retail investors lose money.
👉 We are seeking more contributors who can produce great video educational content about trading for our channel. If you think you have what it takes please get in touch by sending a message to traderATfinancial-spread-betting.com (remove the AT and substitute by @).
👉 It seems a lot of our viewers are non-subscribers. Make sure to subscribe to our youtube channel as we upload regular videos! If you hit the “Bell” icon (🔔) you will receive a notification on youtube every time that we upload a video on our channel. Bell icon hitters are super fans of our channel 🥰
Tenho trabalhado com uma combinação de estratégias, a saber, pyramiding, average down fazendo hedge quando necessário e usando stop gain sem stop loss. Meu stop loss é travar as perdas com o hedge, e sigo iniciando um novo ciclo com a nova tendência do mercado focando em day trade e swing trade no Mini Dólar da B3.
I started daytrading options recently
I've been doing this strategy and I have 100% success rate I couldn't believe what I was doing was right so here I am looking for the worst case scenarios
Amazing approach about how to average down. Congrats. Really helpful because it's always hard to pinpoint the pivots or reversals. Besides, it increases confidence because you are not being stopped out everytime.
why not just cut lost and wait for the stock to rebound and enter?
Because you never know exactly where a stock will start rebounding, so you make the first guess, then a second guess, and up to a fourth guess... and if that fails then you have to get out because it might be a full reversal or huge dump
You are a brilliant presenter and I love the whiteboard.
So always buy the dip?
Average down on long term is beneficial up until the position is too large. At the same time it increases your multiplier by number of shares.
But to average down on a Day Trade? That may be Insane.
This needed for the times lol
I used the unstructured one to buy GME lol I wish I saw this video before
Averaging down is a good strategy especially for long term DRIP trading. Using it on FOREX is where I see the most danger. Even only buying 1000 units of a pair with this strategy can be detrimental to a decent sized account.
Beautiful video about when to average down and when not to do it. Absolutely perfect
i made deadly averaging hoping it will bounce back.......but my trading acnt got bounced lol
bro, u r best
ur videos r my daily medicine.
I love this guy
For structured entry on pullback where u put sl, below 50% or below?
Nope, this is junk advice. The problem is that when you enter a trade in a good spot, you have no reason to add to your position and therefore only make a small profit when it reaches its limit. However, you're always guaranteeing a much bigger loss whenever a trade is going against your position. The only time anyone should add to a losing trade is if there is a new entry TO INCLUDE a new limit, treating it as a whole new, separate trade.
Can I use "average down" to get out of a bad trade?
Averaging down is only sensible if you use it as a 'planned way' to enter your full trade. Doing it to get out of a bad trade is risky as you could easily end up in a situation where your biggest sized trades are your biggest losers thus potentially aggravating the damage (and you have no guarantee that the price won't go further down).
Well if you have a 100 dollar or 500 dollar account you can always say fuk it.who knows maybe you will double that account
I do in indeks s&p and is working
It's a euphemism for adding to a losing position and you should stop doing it.
Great video ,thanks
Thank you
Thanks bro🙏👍🏻👍🏻👍🏻
The game is buy low, sell high. Doesn't need to be more complicated
r u kidding? the risk: reward ratio is soooooo high that u will end up broke
Terrific.
thanks sir!
good video