Pyramid averaging or Stop Loss, which is worthy these days?

[terminator_123]

just look around & find those who averaged a stock rigt from 2008....!
always prefer for stoploss...no matter it triggers 10 times

Actually averaging isn't too bad when coupled with good discipline. You have to keep a good eye on RSI levels and enter into a very small initial position. After that, position shd be increased only at pre-determined levels. If its not working out in max of 4 working days or a fixed stop loss is hit, you should take a loss
But if the tide turns (most of the time, there will be pull backs from current trend) then even a small move in your direction is enough to make a decent profit. Works good with options more than futures... Ofcourse just like every thing, risk factor exists

 

[linkon7]

It only takes 1 bad trade to wipe out a week's gain. Pyramid averaging of losses is just a sure way of encouraging that 1 trade. 4 times out of 5, you'll get away with averaging down but that 1 time, u get stuck will drain u badly.

I play with a smaller lot with a tight SL, incase the reason i got in, vanishes or i start doubting the desired move, i take a exit without even waiting for the SL to be hit. Incase the direction was right then i raise the SL to above break even. Only when the trade is giving good profit, i average up with the same qty. the criteria here is that, the SL should be above the break even of both the lots, that way, in case the market turns, i get hit without a loss. This gives me fewer good trades and i end up letting the profit run and cutting the loser early.

Position sizing and risk management is the Key. there can never be a substitute for SL....

 

[tradertrader]

All depends on your analysis. If you are doing planned averaging that till what level you want to average and you are confident and most of time successful in identifying direction then ok. Else Bad idea to average loss trade. Averaging works better where you are able to judge reversal most of time. It is waste when trend is ongoing. Average loss trade on luck is suicide.