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money. It just means that the volatility and velocity of trading volume slow down; more wiggles, jiggles, and head fakes are experienced; and trading sometimes becomes more difficult. Never trade out of boredom. There is no more unnecessary practice than trading because you have nothing else to do. I always advise traders to remain focused even when the market slows down, because you never know when a market opportunity will stand up on its rear legs and beg to be taken. It is important to maintain a state of alertness so you will be able to act instantly when events so demand. Losing concentration can cause hesitation when making a trading decision, and even a hiccup of indecisiveness can cost you a good trade. Don't be lazystay focused on taskif you don't, there are many others who will, and they will beat you to the punch every time. |
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Averaging down is death to the DAET trader! For our purposes, price averaging consists of adding to a losing position after the price has dropped. The concept of dollar price averaging works over the long run, but not in the DAET environment. With dollar price averaging you buy 100 shares at $40 a share and another 100 shares when the stock has dropped to $20 a share; you have now reduced your average price per share to $30. To the long-term investor, this lower blended price is a benefit. |
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To the DAET trader, the price drop is a bad investment if you were long (because the price dropped from $40 to $30). This was a good stock to have shorted all the way down, but not a stock to have held an increasing position in as it fell. |
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In Direct Access Electronic Trading there should normally be no term longer than the close of today's market. If a stock is going down, gauge its potential again tomorrow morning when you see it going down even further. DAET traders are not trading for the long term because, as John Maynard Keynes noticed, we are all dead in the long term. |
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