AVERAGING UP OR DOWN TO AVOID BEING FAKED OUT
How many times, did you have the right idea or trade plan but you boshed the execution and got faked out or had a terrible entry. if you are in my situation, Many!!!!!
I had myself thinking and looking at recaps from others . How can i improve that ?
just to give you a bit of insight, I daytrade options on the big tech names with heavy liquidity
What i was doing before :
- Entry full position at E1 using either a level or Moving average as stop area
- In best case scenario the trade would work out rightaway and full gain potential reached
- often stopping out as risk tolerance was streched even before going back to that level or Moving average used as stop
- right after i stopped out, i would re-enter the trade at E3 and it finally worked out (best case scenario after stopping out)
What i am doing now :
- Entry 1/3 position E1 to have some skin in the game expecting a pull back before makeing the move
- If the stock makes the move right away i limit my profit potential but still have a winning trade
- when pull back happens wait to see weakness happen at my initial stop level if i am short or strength if i am long and add another 1/3 position to have a better average price E2
- Add the final 1/3 position when the stock goes back to E1 level and use your normal sytem R/R ratio to take your profits
Advantages:
- if the stock does a reversal and you get stopped out, your average is closer to stop area and your loss smaller or if it is a violent reveral, you get stopped out of 1/3 or your normal entry as you never had the chance to add the 2/3
- you are more consistent with your stops as you can resist pullbacks and be confident to add in
- you still follow your system using your technical level or MA or VWAP stops but with a better entry
- lets face it there will always be a pullback when you enter the trade
- can be benificial entry strategy for stocks or options with higher spreads
- Easier to stop out at breakeven if you finally do not trust the move
This entry strategy can be used on any timeframes
Since i have been doing it this way, i have seriously upped my game with a much higher win %
might work out for you
have a good one !
I had myself thinking and looking at recaps from others . How can i improve that ?
just to give you a bit of insight, I daytrade options on the big tech names with heavy liquidity
What i was doing before :
- Entry full position at E1 using either a level or Moving average as stop area
- In best case scenario the trade would work out rightaway and full gain potential reached
- often stopping out as risk tolerance was streched even before going back to that level or Moving average used as stop
- right after i stopped out, i would re-enter the trade at E3 and it finally worked out (best case scenario after stopping out)
What i am doing now :
- Entry 1/3 position E1 to have some skin in the game expecting a pull back before makeing the move
- If the stock makes the move right away i limit my profit potential but still have a winning trade
- when pull back happens wait to see weakness happen at my initial stop level if i am short or strength if i am long and add another 1/3 position to have a better average price E2
- Add the final 1/3 position when the stock goes back to E1 level and use your normal sytem R/R ratio to take your profits
Advantages:
- if the stock does a reversal and you get stopped out, your average is closer to stop area and your loss smaller or if it is a violent reveral, you get stopped out of 1/3 or your normal entry as you never had the chance to add the 2/3
- you are more consistent with your stops as you can resist pullbacks and be confident to add in
- you still follow your system using your technical level or MA or VWAP stops but with a better entry
- lets face it there will always be a pullback when you enter the trade
- can be benificial entry strategy for stocks or options with higher spreads
- Easier to stop out at breakeven if you finally do not trust the move
This entry strategy can be used on any timeframes
Since i have been doing it this way, i have seriously upped my game with a much higher win %
might work out for you
have a good one !
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