Is Profitable?
is Averaging Down Profitable?
Hi,
All traders have losing trades, because no trading system is correct 100% of the time.
However, it is human nature (or perhaps society's pressure) to want to avoid having any losing trades (no matter how small or infrequent), so some traders use a strategy known as averaging down whenever they find themselves in a losing trade.
Averaging down is a strategy that is used to lower the average entry price of a trade.
Many successfull manual trader recommend not to average down...
but as a programer, after 3 yrs experience in automating trading
and testing...
i have come into conclusion that, averaging down is profitable,
as long as your trade did not hit stoploss, and you do not go above ea risk,
you can let your ea open a new trade
in better price, with higher leverage.
do your test as well,
would like to hear your opinion
I'd say most of that theory lies in human nature. They create their strategy first, but set out to make only half of the optimal target while allowing their stop to be greater than the optimal stop. It really just shows that the trader doesn't trust the strategy much at all and would rather rely on their 'gut.' I'm not sure why people would teach that this is the best way to do it- I know I try my hardest to stop myself from doing this.
I'd say most of that theory lies in human nature. They create their strategy first, but set out to make only half of the optimal target while allowing their stop to be greater than the optimal stop. It really just shows that the trader doesn't trust the strategy much at all and would rather rely on their 'gut.' I'm not sure why people would teach that this is the best way to do it- I know I try my hardest to stop myself from doing this.
Did You check it on backtesting as well?
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Many successfull manual trader recommend partials,
and insists that partial profits are profitable!
Reasons to take:
1. DD% - it reduces drawdown
2. Losses# - it reduces losses
3. Risk- it reduces risk of time in market, and lower your exposure.
4. Psychological effect- it is like an insurance to gain profit,
it feels good, to put money in pocket, trader is more relax, and sleeps better.
But...
Many ea programers, with experience in automating trading
and testing... have come into conclusion that, partial profits are not profitable!
Reasons:
1. Average pips per trade - is increased , also expected payoff is increased
2. Reward- profit is increased. be patient. it will be worth on the long run
3. Be fair- Take partial profits only if you are willing to take partial losses when trade move against you
4. Backtesting proof- if backtesting results say that 100 pips gives best results,
why should i take partial profits after 20 pips?
It really just shows that the trader doesn't trust the strategy much at all and would rather rely on their 'gut.' . if you do backtest your strategy by an ea, and get an optimal target TP parameter. why to use partials?
want to hear your opinion. :-)
Don't forget to vote ^ above ^ :-)