MoneyTec Traders Community Forum - View Single Post - Need Advice -Course with a Mentor?

James · 30-09-2004, 00:26

Hi Pittsburgh

Thanks for the frank and open answer. You sound like a nice chap. I don't actually have any problems with averaging into a losing position, as long as it is part of a controlled money management and trading plan. It's only when it gets out of control that it can be dangerous. Problem is that, unless you are very disciplined, it can get out of control all too easily as averaging can lead to bad habits.

I have re-studied your positions as posted on your threads, and I must also be honest when I note that the very extended, heavy averaging and leveraging used in building your positions is not healthy. Although this time it went your way, next time it may not, and a margin call could be the result. I am assuming your leverage is something like 50:1 at the end of the averaging, and this will, in the end, lead to complete loss. Options protection is one thing, but costly and not failsafe either.

I am not trying to be critical here, and I do understand your approach. I am simply trying to point out some aspects of your trading which worry me.

Back to books: I would very much like it if you read "Fooled by Randomness" by (I was going to say Tareq Azziz) Nicholas Taleb. This will amplify my points 100 fold.

I hope that I have not come across too negatively, and this is not a personal attack.

30-09-2004, 00:26	#45
James Team Forex Join Date: May 2003 Posts: 1,229 Downloads: 0 Uploads: 0 Rep Power: 0	Hi Pittsburgh Thanks for the frank and open answer. You sound like a nice chap. I don't actually have any problems with averaging into a losing position, as long as it is part of a controlled money management and trading plan. It's only when it gets out of control that it can be dangerous. Problem is that, unless you are very disciplined, it can get out of control all too easily as averaging can lead to bad habits. I have re-studied your positions as posted on your threads, and I must also be honest when I note that the very extended, heavy averaging and leveraging used in building your positions is not healthy. Although this time it went your way, next time it may not, and a margin call could be the result. I am assuming your leverage is something like 50:1 at the end of the averaging, and this will, in the end, lead to complete loss. Options protection is one thing, but costly and not failsafe either. I am not trying to be critical here, and I do understand your approach. I am simply trying to point out some aspects of your trading which worry me. Back to books: I would very much like it if you read "Fooled by Randomness" by (I was going to say Tareq Azziz) Nicholas Taleb. This will amplify my points 100 fold. I hope that I have not come across too negatively, and this is not a personal attack.