Although the "Black Swan" outlier event can happen, averaging down on the whole numbers while using support & resistance levels have proven to be extremely profitable - especially in Ranging Markets!
I'm familar with Paul Tudor Jones' "Losers Average Losers" assertion. However, I'm familar with quite a few wealthy traders that uses the averaging down strategy during specific market conditions. An additional leveraged boost to averaging down is to increase the lot size as you average down. For example, if the 1st position is 1 lot, then the 2nd position would be 2 lots, the 3rd position would be 3 lots, etc.
Of course, the the "deeper one's pockets" the better chance you'll have to succeed... but on the flip side, the potential for a LARGE LOSS is greater as well.
Based on my MM criteria, the only way I would lose is if a currency price moved in a given direction for more than 2000 pips beyond a support or resistance level without at least 700 pips of retracements during this run. The 700 pips of retracement can be dispersed throughout the 2000 pip run, as it would not be necessary to have a 700 pips retracement all at once. For example, a retracement of 100, then a couple of days later, another retracement of 200 pips then a few days later, another retracement of 100 pips, etc. Also, if the distance between S&R is 500 pips, then that's a 2500 pip run without the retracements. I'm sorry, but the market has yet to do that... However, I understand that there's a first time for everything.
I know this is a HIGHLY UNCONVENTIONAL approach; however, the backtesting clearly shows the profits are there without blowing up, even throughout the high volatility periods in the last 2 years.
Your thoughts...
Walt
I'm familar with Paul Tudor Jones' "Losers Average Losers" assertion. However, I'm familar with quite a few wealthy traders that uses the averaging down strategy during specific market conditions. An additional leveraged boost to averaging down is to increase the lot size as you average down. For example, if the 1st position is 1 lot, then the 2nd position would be 2 lots, the 3rd position would be 3 lots, etc.
Of course, the the "deeper one's pockets" the better chance you'll have to succeed... but on the flip side, the potential for a LARGE LOSS is greater as well.
Based on my MM criteria, the only way I would lose is if a currency price moved in a given direction for more than 2000 pips beyond a support or resistance level without at least 700 pips of retracements during this run. The 700 pips of retracement can be dispersed throughout the 2000 pip run, as it would not be necessary to have a 700 pips retracement all at once. For example, a retracement of 100, then a couple of days later, another retracement of 200 pips then a few days later, another retracement of 100 pips, etc. Also, if the distance between S&R is 500 pips, then that's a 2500 pip run without the retracements. I'm sorry, but the market has yet to do that... However, I understand that there's a first time for everything.
I know this is a HIGHLY UNCONVENTIONAL approach; however, the backtesting clearly shows the profits are there without blowing up, even throughout the high volatility periods in the last 2 years.
Your thoughts...
Walt