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Yeah I know. But I'm using 1/3 the capital that I would otherwise use. Hopefully there will be some good movement.

Silver chart:

If silver drops more than 33% I wonder what will happen to USLV, which is a 3x weighted version of silver. So theoretically if silver fell by 34% USLV would fall by 102% so there would have to be some sort of reverse split or something.

Can you explain the concept correctly then so we understand it better?

Unless what? (message too short)

I assume he's referring to the way I trade.

The $6.95 order was filled at $6.01 this morning when the market gapped down at the open. I got up and saw it was trading at $6.05 or so and was like "whoa, I wonder what price I got filled at" and then saw it was filled at the open.

USLV is weighted silver and I don't think silver is going to zero. The next buy position is 1,600 shares @ $6.95. I'm not using very much of my account on this trade so even if it takes a while to go back up that's ok. I agree with you about not trading individual stocks like this. I only do the indexes, and now recently silver. I am a little more nervous about the silver trade than the S&P so let's see how it goes.

And now back on topic, if anyone is paying attention rather than arguing, I've been trading USLV (3x weighted SLV) with this method since April. I bought 185 shares @ $10.81 on April 15th. On May 15th I placed an order to buy 400 shares @ $9.00 which was filled on May 17th. On May 17th I then placed an order to buy 800 shares @ $7.92 which was filled on June 11th. And just again for the people who don't seem to quite get what I'm saying, I never said the market is actually random, I just said that it's random to me. It might not be random, but I have no idea how to predict it, so that makes it random to me. It might not be to you.

Theoretically yes. Assuming you are talking about stock trades, you may have double the money (or 4x if you're a pattern day trader). Other markets may have their own leverage system so for now we're only talking about stocks. Yes. Your account will say something like this: Cash balance: $30,000 Buying Power (non-Margin): $30,000 Buying Power (Margin): $60,000 These values may change depending on if you currently have any positions. Different stocks may require different levels. If you do more than 3 round trips in a week and your account gets labeled as a pattern day trader, you may get 4x margin. A margin account lets you bypass the waiting period for funds to become available. No. I have 2x margin in my account (I don't day trade stocks) but I don't actually use the margin, it's just there because I happen to have a margin account. Keep in mind that just because you have margin doesn't mean you have to use it. In the example you gave with a $30,000 account, even if you have a margin account and they give you $60,000 buying power, as long as you don't buy more than $30,000 worth of stock you won't be using margin and you won't be charged any interest. Correct, it would be available immediately.

I didn't know it was the holy grail.

So I notice that the ES barely gets unbalanced (sometimes it will be like 15,000:20,000 for a moment, usually closer to 18,000:20,000). Some other instruments get big, 2:1 or more imbalances, such as gold and CL. Their volume is also much lower. The CL might have 200-600 contracts on each side and gold like 50-150.

I assume from your name you are trading Forex. I wouldn't recommend trading Forex like this but it's up to you. I think the adds would be too far apart. If it works for you, cool, but I think you'd need more than a week of testing.

I think it's doable with $100k. The initial sizing is going to be small and some people might not like that. Everyone wants to make a ton of money on every trade and so they won't like using small position sizes. The one trade I mentioned ended with a net of over $41k and was open for a few months. My most recent trade involved QLD, which I just closed out on Friday (posted in real time in my journal thread and on Twitter) for less than $3,000 gain in 5-6 months. Why? Because the Nasdaq didn't move very much since I bought it. So people are going to say "you made less than $3,000 in 6 months, that's like less than 1% of your account, you suck and your system is stupid." But I'm sure none of those people post real time trades, and I'm sure none of them are consistently profitable. People love to criticize other people's trading. Do well and it's "you got lucky, but your method sucks." Do alright and it's "you suck, just buying and holding the S&P500 would've gotten you higher returns." Lose money and it's "you suck, your system sucks and/or you don't follow the rules." I'm ok with only making a little bit or nothing when the market goes up without retracing, because the alternative for me is buying a big position and losing. When the market goes up and down, I do pretty well. The initial target is the previous high before the pullback. Depending on how low it goes, the target can change. For example, if SPY drops from $150 to $50, I probably wouldn't keep $150 as the target. I agree that pyramiding in (adding smaller position sizes as price goes in your favor) is a bit safer because it doesn't raise the average cost so much, but that requires starting with a big initial position. What happens if you're wrong? Disagree. Well I guess I'm trading with the long term trend since SPY is higher than it was when it started, technically we're in an uptrend. I don't look at it that way, though.

I'd be interested in reading that. I'm always looking to improve the way I trade, and averaging into winners hasn't worked for me as it requires predicting price and knowing when price is going to reverse to prevent the winners from turning into losers, but I'm always open to learning more. It doesn't have to be an uptrend. Assuming you define an "uptrend" as a series of HHs and HLs, and a "downtrend" as a series of LLs and LHs, I would still scale into a downtrend, too. In fact, downtrends may go lower than uptrend pullbacks allowing you to get even more shares. Assuming you define a trend by the slope of an MA, well then, I have no idea, because in that case the "trend" happens to depend on the length of MA you chose. I think the concept of a "trend" is a bit undefinable, anyway, but uptrend OR downtrend, I'm still buying more as price goes down. Correct. Leveraged ETFs are ok, but using margin is not. No loss from a long position is taken. Sometimes if I am trading the opposite direction at the same time I might exit that one for a loss but only if the main S&P position is exited for a net gain. You can see an example of this in my other thread. Correct. It can be whatever you want. Originally I used Fibonacci retracements just because I wanted to show that any levels can work while simultaneously making a point that Fibonacci numbers have nothing to do with trading. You can use whatever levels you want as long as they are spaced in such a way that you can still add more if price goes lower and you use appropriate position sizing. You know, it depends on where the S&P is when I begin. Sometimes I more than double with each add, sometimes I double. The general idea is to lower the average cost by a decent amount with each add. In the big trade I mentioned in the other thread, the adds were: May 5, 2011: 200 @ $134.22 May 16, 2011: 600 @ $133.32 May 23, 2011: 1,000 @ $132 (please note these first 3 adds were Fibonacci retracements of a recent swing:chart. The reason I got filled at $132 and not $132.44 where the actual retracement was is because price gapped down below that price on the morning I got filled. Please also note I don't think there's anything special about Fibonacci retracements) August 2, 2011: 1,400 @ $ 127 August 8, 2011: 2,500 shares @ $115 The at this point I was going to start buying SSO if SPY got to $105 or $100, but it never did, so I didn't buy any more after that last point. During the time this trade was open I was also periodically buying SH (inverse SPY) and closing it out for profit to lock in some gains as price moved against me. It helps reduce drawdown and if price goes back and forth within a range I can close and reopen the position. You can see exactly when and how much SH I bought in my journal thread. The last point is correct. As I've mentioned, sometimes you end up with either a small position as price goes up, or sometimes you end up waiting while price bounces around a range that is lower than your target profit but higher than your next add point. If you are using SPY you might be getting a decent dividend during this time (less so with SSO), and you can also hedge with SH and close it out on the down swings (while SPY stays open). Yeah. Well my trading capital is less than $1M, but as I stated in the other thread it's probably not the right strategy for a $10,000 account. I mean you could do it, but commissions at the first levels would take a big chunk out of your profits, and your overall dollar amount of return probably wouldn't be much. My goal is just to make consistent profits over time. Sometimes price doesn't retrace and I don't trade. Sometimes I have a small position that goes up. Sometimes I have a position that is sitting in drawdown for a period of time while price decides what it wants to do. These come with this type of trading and like I said, this isn't the holy grail, nor is it the way for everyone to trade, nor is it even the way for most people to trade. Most people want to chase trends and don't have the patience to sit on a position that is drawn down more than 2% of their account for weeks or months. Sometimes I make a good return. Sometimes I make a small return. I like big wavey markets but it doesn't always do that. Let me know if you have any other questions.