Short Term Trading Weekend Lounge: 7 -9 Apr, page-91

D&H.
I'm a bit like Min and Free mixed together.

Like Min, I am happy to "average down" but based on my FA foremost, not TA which only use for vsst and entry timing...and it's always a moving feast based on latest info of course. I don't use stop losses, if the FA changes, then I'll sell at a loss...otherwise I'll do following

Reason I don't mind averaging down is because I haven't gone all in on planned buy size.
Like Free, but I use pyramiding in a slightly different way. A much smaller pilot buy, and this is to gauge whether I'm on the right track. A little bit of skin, so you follow more closely.

Usually my buys, and I'd say 90%+ are at bottom of trends, after they have put in a decent consolidation, or double bottoms on LT support. Usually 3-6 months in most.

Visually, CTP chart probably explains best, as it's about a year
1. VSP spotted Feb 2016
2. FA was based on major gas asset position/ new pipeline and looming ECGas run.
3. Pilot March around 9.5c
4. Watched - April made lows, purchased larger holdings twice on weakness low 8s ("averaged down" from small $2k pilot).
5. Bounced along bottom 5 months from spike.(consolidation mostly under 10c)
6. Would also average up on technical breaks in many cases, like 10c and 12c CTP (but didn't this time)
7. Sold first spike above 16c - October. (100%+ made) - little early but happy as retreated to 12.5c then....
8. CTP made 20c by Dec, 150% off bottom/ 10 months.

If I did buy on breaks when it broke up through 10c. Ideal trade would have looked like this.

1. Pilot $2k 9.5c
2. $10-20k (first daily spike down) 8.1c
3. $10-20k (2nd spike down - can be close to first) 8c
4. $10-20k (on 10c break)
5. $10-20k (on 12c break)

I think most people would think average down but with equal $ positions each time, so maybe not averaging down in the common sense.
So I don't think averaging down is right with TA. It can be used effectively over a longer time-frame with FA if you plan it with that strategy in mind.

Many just say don't average down 100%, which I disagree with depending on your trading style.