Paul Tudor Jones V. Dr. Alexander Elder

[Tams 20]

if your first analysis was faulty,

which got you into a bad trade,

what make you think doubling down will somehow correct a faulty analysis?

[Patuca 13]

if your first analysis was faulty,

which got you into a bad trade,

what make you think doubling down will somehow correct a faulty analysis?

 

Good question. I don't know if I can answer. All I can say is that it has corrected a faulty analysis more times that it has failed. At least for me. Faulty analysis is hard to put a finger on because even the most perfect analysis do not always work out. I see intraday stops as not carved in stone. I am not the slave of intraday stops. They are simply a tool I USE. The only thing I must be a slave to is PA. If PA has turned momentarily against me but I have good reason to believe it is quickly going to turn back in my favour then I have no problem adjusting my stop and even doubling at what I think is the precise moment to do so. Since I trade almost pure price action I feel I can do this. I have and always will be a discretionary trader. All of my rules are rules but they are flexible to some degree simply because the market is flexible. I can live with that.

[ospogrp 10]

You are much better off stopping out and re-entering if you still like the trade.

 

Dr. Elder has created some excellent Indicators. I use them constantly.

PTJ has certainly manages a vast amount of other peoples money.

Doubling Down can only be done in fluid trading instruments.

I seldom double down but do maintain tight stops.in short-term trading.

Scaling out of a winning Trade is a tool if the directional bias is strong.

O

[phantom 16]

 

Contrast this with Paul Tudor Jones' statement: "Only losers add to losers.:

 

Let's see how TL members feel about this topic...

 

 

Hi Jack,

 

Seeing how Paul Tudor Jones is soooooo much more successful a trader than Dr. Elder...

 

You decide.

 

 

Luv,

Phantom

[bathrobe 10]

This story might help, you decide.

 

After I proved to my father I could trade he backed me with a large amount of money, late 08-mid 2010. I traded well made money more than I could ever have imagined. One day I got into trouble and thought I would use my size to bail me out. I ended up exiting +1 tick but I had the most harrowing 2 hours of my life, I thought I was going to have a heart attack and I was not yet 30. I could feel my heart beating throughout my body. I was very very very lucky to get out but learned from the experience and changed my risk management to not do this ever again.

 

Also, who is Dr. Alexander Elder, I don't know but I would bet he is a vendor of some sort and if I am right about that why is he not just trading. I am sure selling whatever takes up time he could be working on entries. Averaging losers will always catch up to you, check out the threads about Robert Hoffman with his -312k in a day.

 

Best of luck to you.

[Tams 20]

in day trading doubling down has saved me from a loss many times more than causing me a further loss. however, it all depends on where it takes place. if price reaches a support level and hold and turns bullish then it makes sense to do it. The basic idea is price has to travel less distance back up to my breakeven point. And it should be before price reaches my puke point stop. For me it makes sense to use an intraday somewhat flexible stop but have a trade management stop at puke level. Of course one could argue just let the intraday stop take you out. How many of you have seen your stop get knocked out and seconds later price is back up and you are in the money if you wouldn't have gotton taken out. With all the HFT going on nowdays the computers algo's create some problems. I prefer to use an intraday trading stop that is adjustible within certain guidelines and a puke point stop that nevers gets moved.

 

if your first analysis was faulty,

which got you into a bad trade,

what make you think doubling down will somehow correct a faulty analysis?

 

Good question. I don't know if I can answer. All I can say is that it has corrected a faulty analysis more times that it has failed. At least for me. Faulty analysis is hard to put a finger on because even the most perfect analysis do not always work out. I see intraday stops as not carved in stone. I am not the slave of intraday stops. They are simply a tool I USE. The only thing I must be a slave to is PA. If PA has turned momentarily against me but I have good reason to believe it is quickly going to turn back in my favour then I have no problem adjusting my stop and even doubling at what I think is the precise moment to do so. Since I trade almost pure price action I feel I can do this. I have and always will be a discretionary trader. All of my rules are rules but they are flexible to some degree simply because the market is flexible. I can live with that.

 

ever heard of the Hoffman effect?

[bathrobe 10]

I googled him, he goes to traders expos and writes books, does he trade? PTJ does, and spends his free time counting his billions.

[Tams 20]

I googled him, he goes to traders expos and writes books, does he trade? PTJ does, and spends his free time counting his billions.

 

no he does not trade,

he gambles, with the martingale method.

he had a spectacular blowout recently -- He over extended by keep adding contracts to a losing trade. Eventually he ran out of money; the broker shut him down and he lost 312K in a single TF trade.

[bathrobe 10]

no he does not trade,

he gambles, with the martingale method.

he had a spectacular blowout recently -- He over extended by keep adding contracts to a losing trade. Eventually he ran out of money; the broker shut him down and he lost 312K in a single TF trade.

 

ah yes Hoffman, have you seen his youtube video where he says losing 312k is a learning experience! He promises another where he goes over the trade, I look forward to it.

 

I googled Dr. Elder, I don't know if he trades/gambles or not.

 

Is what Hoffman doing even legal? I am sure most of his "students" have very small accts. and are unaware that martingaling always leads to a blowup and most cannot afford to average losers like him I assume.

[david77 10]

This whole business of entering a position based on whether you already own the stock or not seems a little childish. Does anyone seriously think that the stock knows that you own it? Do you think that a stock's behavior is influenced by whether or not you own it? I certainly don't.

There are times when, based on rules I've developed, it makes sense to buy a stock. And, 5 minutes later when the stock is at a lower price, it makes even more sense to buy it.

[optiontimer 10]

I googled Dr. Elder, I don't know if he trades/gambles or not.

 

Well, they all claim to trade, right? And they all imply they do it well.

 

It doesn't cost anything to make a claim.

 

-optiontimer

[Patuca 13]

This whole business of entering a position based on whether you already own the stock or not seems a little childish. Does anyone seriously think that the stock knows that you own it? Do you think that a stock's behavior is influenced by whether or not you own it? I certainly don't.

There are times when, based on rules I've developed, it makes sense to buy a stock. And, 5 minutes later when the stock is at a lower price, it makes even more sense to buy it.

Exactly! I could not have said it better. I do whatever the market is telling tell me to do. Sometimes that means doubling up.

[Patuca 13]

no he does not trade,

he gambles, with the martingale method.

he had a spectacular blowout recently -- He over extended by keep adding contracts to a losing trade. Eventually he ran out of money; the broker shut him down and he lost 312K in a single TF trade.

 

he had no puke point stop.

[bathrobe 10]

Exactly! I could not have said it better. I do whatever the market is telling tell me to do. Sometimes that means doubling up.

 

To each his own.

 

If it works continue obviously

 

My way of trading does not involve this and I was sharing my point of view.

[Patuca 13]

To each his own.

 

If it works continue obviously

 

My way of trading does not involve this and I was sharing my point of view.

I agree everyone has to float their own boat. I too was simply sharing my point of view. I would be the first to say it will not work for everyone.

[SIUYA 11]

in day trading doubling down has saved me from a loss many times

 

Just to be picky but I have to point out the obvious flaw here (as Tams does) - you already have a loss so doubling down does not save you from a loss.....

 

disclosure - I go with the PTJ method

 

While every one has their systems and everyone can and should do what works for them.....there is one thing that often most users of martingale systems dont recognise or want to admit - and this is what riles others up, and this is ....

 

at some stage you will blow up (or even if using puke stops) the losses will be large and these are often large enough to either close and account or at least do enough mental damage as to impede future trading.......if you can accept that then great, but if you fail to even recognize that and then you are deceiving yourself (and possibly others if that view is "sold" without the added risk disclosure.)

[Patuca 13]

Just to be picky but I have to point out the obvious flaw here (as Tams does) - you already have a loss so doubling down does not save you from a loss.....

 

disclosure - I go with the PTJ method

 

While every one has their systems and everyone can and should do what works for them.....there is one thing that often most users of martingale systems dont recognise or want to admit - and this is what riles others up, and this is ....

 

at some stage you will blow up (or even if using puke stops) the losses will be large and these are often large enough to either close and account or at least do enough mental damage as to impede future trading.......if you can accept that then great, but if you fail to even recognize that and then you are deceiving yourself (and possibly others if that view is "sold" without the added risk disclosure.)

 

I have done it many times. Double up and it has to go back up (in case of a long position)` a lessor amount to breakeven and soon you are in the money again. Of course, as I stated I would only do this if PA turns bullish and I think it may not be bullish enough to make it back up to my original entry point but it will travel back enough for me to get out at a gain (even if slight). If I think it may well do that then I will not hestitate to double or even triple up. If I am wrong then I will immediately take all losses. It has to move up right away after doubling or I am out. So, I have, many times thrown good money after bad (and I know it breaks all the orthodox rules) and many times..more often than not I have come out with a profit. Doing this has never caused me to blow an account that I can remember and I have been trading since the late 80's.

 

Perhaps it has to do with my method of trading??? I average an 87% to 90% win rate.

 

Anyway it works for me and I am not afraid to use it anytime I think there is a legimate reason to do so. If I don't think there is a reason to do it then obviousley the best thing to do is to take the loss immediately.

 

BTW I don't use a martingale system. This is not standard operating procedure for me in my trading. However, it is a tool I will use if I think conditions warrant using it. I have my rules but none are carved in stone. Only price is the dictator I listen to. This makes my trading highly discretionary and sometimes a gray fog but I am ok with that and it works for me. The market can change my opinion on a dime. I will not hesitate to adapt to it.

 

For others this may not ever work and could be dangerous. I don't know.

[Tams 20]

I have done it many times. Double up and it has to go back up (in case of a long position)` a lessor amount to breakeven and soon you are in the money again. Of course, as I stated I would only do this if PA turns bullish and I think it may not be bullish enough to make it back up to my original entry point but it will travel back enough for me to get out at a gain (even if slight). If I think it may well do that then I will not hestitate to double or even triple up. If I am wrong then I will immediately take all losses. It has to move up right away after doubling or I am out. So, I have, many times thrown good money after bad (and I know it breaks all the orthodox rules) and many times..more often than not I have come out with a profit. Doing this has never caused me to blow an account that I can remember and I have been trading since the late 80's.

if your original analysis was faulty,

what makes you think your second analysis cannot be not faulty?

I am not saying it could not be good, I am just asking a rhetorical question.

 

 

Perhaps it has to do with my method of trading??? I average an 87% to 90% win rate.

Hoffman had a 100% win rate -- 535 straight days without a losing trade !!!

 

 

Anyway it works for me and I am not afraid to use it anytime I think there is a legimate reason to do so. If I don't think there is a reason to do it then obviousley the best thing to do is to take the loss immediately.

 

BTW I don't use a martingale system. This is not standard operating procedure for me in my trading. However, it is a tool I will use if I think conditions warrant using it. I have my rules but none are carved in stone. Only price is the dictator I listen to. This makes my trading highly discretionary and sometimes a gray fog but I am ok with that and it works for me. The market can change my opinion on a dime. I will not hesitate to adapt to it.

 

For others this may not ever work and could be dangerous. I don't know.

 

In early June this year, I predicted that Hoffman will have a blowout within 12 months.

It happened in 5 weeks.

 

I wish better luck to you.

[Tams 20]

High win rate is a sucker's game; it is only a number, a meaningless number.

But noobie suckers will suck up to it.

 

as you can see, Hoffman had a 100% win rate -- 535 straight days without a losing trade !!!

yet he blew out spectacularly.

 

High win rate can mean 2 opposite things...

 

1. you are sooooo gooooood, you don't lose.

 

2. you are afraid to lose, so you hang on to your losers until break even.

 

 

if we drill down deeper, we will find out that:

 

1. if you don't know how to trade, you will be afraid to lose.

If you are afraid to lose, you will hang on to your losers.

One of the strategy to accomplish break even (or small profit) is to double down.

 

2. high win rate accompanied by a history of high draw down simply means one thing -- Hope is your main strategy

 

3. high win rate accompanied by high commission to profit ratio means your are either a scalper, or gambler. You don't really know (or care) where the market is going.

 

4. high win rate accompanied by occasional blow out... means you are really a nobody.

 

... and the list goes on...

Edited July 22, 2011 by Tams

[Patuca 13]

if your original analysis was faulty,

what makes you think your second analysis cannot be not faulty?

I am not saying it could not be good, I am just asking a rhetorical question.

 

 

 

Hoffman had a 100% win rate -- 535 straight days without a losing trade !!!

 

 

 

 

In early June this year, I predicted that Hoffman will have a blowout within 12 months.

It happened in 5 weeks.

 

I wish better luck to you.

 

Again I am not doing what hoffman did/does. I do not double up everytime the market turns against me. And of course I could be wrong the second time too. If so, then the answer is to cut losses immediatley. How many times have you dutifully taken the loss to see the market turn on a dime and shoot right back up. Those kind of losses can add up too.

[Patuca 13]

It may be meningless to you but it isn't to me. As to the other comments well whatever floats your boat. I know what floats mine!

[zdo 20]

... high win rate accompanied by occasional blow out... means you are really a nobody.

 

That was a great post! ...right up to the part about "really a nobody." Tams, None of us are nobody's . Not a single one of us.

 

Still, a great post... telling it like it is.

 

You are pointing out the inevitable destruction waiting for a trader who is doubling down for psycho-neurological reasons instead of reasons related to actual market actions. Been there - done that :crap:. I think Patuca is talking about reasons related to actual market actions. From what I can tell skimming the posts, I have systems similar to Patuca's. Also very high hit but rates, but since mine are only applied under certain market conditions, they aren't a high percentage of the whole bottom line. They are at once extremely precise for some aspects and almost totally imprecise for other aspects - like where and when subsequent add ons will be. Anyways, in these systems I 'double down' all the time. Sometimes when price comes to a good buy or sell point, it will turn immediately. But other times so it will make more thrusts down or up. If the first thrust is a good quality signal, then subsequent thrusts are also good. Adding more and more is warranted (again, only in certain market conditions). I want to be in any which way the turn occurs, so I don't skip the first and wait for more better entry. I get in, willing to get in some more all the way down or up to a certain precise / stop point. ( ie I shouldn't be deprived if it takes certain 'crowds' a little longer to catch on )

 

A real time example from this morning is attached. It does not have any examples of thrusts that go way past the first entry point and still being good for piling on size - but those happen all the time too. In any case, I would add more if the signal is there - whether next entry price is better or worse than first entry price.

In the first example on the attached, the price went further than the first short entry signal shown at far left arrow. Add more at 2nd red dn arrow.

In the next example price went beyond first entry twice. Add more each signal, 2nd and 3rd green up arrows.

In the next two, price did not go higher than first entry, Still add more at the 2nd red arrow in middle of illustration.

In the final two, again price did not go beyond first entry. Still add more at the 2nd green arrow.

The first signal of each of these trades qualifies the subsequent entries. If they are at even better prices - fine. If they are not at better prices - also fine. None showed on this example and I'm not taking time to go cherry pick one in history. but if they are at far better prices (as long as it doesn't go past stop loss point) - even better! Even if it looks like stupid doubling down !

[Tams 20]

That was a great post! ...right up to the part about "really a nobody." Tams, None of us are nobody's . Not a single one of us.

 

Still, a great post... telling it like it is.

 

You are pointing out the inevitable destruction waiting for a trader who is doubling down for psycho-neurological reasons instead of reasons related to actual market actions. Been there - done that :crap:. I think Patuca is talking about reasons related to actual market actions. From what I can tell skimming the posts, I have systems similar to Patuca's. Also very high hit but rates, but since mine are only applied under certain market conditions, they aren't a high percentage of the whole bottom line. They are at once extremely precise for some aspects and almost totally imprecise for other aspects - like where and when subsequent add ons will be. Anyways, in these systems I 'double down' all the time. Sometimes when price comes to a good buy or sell point, it will turn immediately. But other times so it will make more thrusts down or up. If the first thrust is a good quality signal, then subsequent thrusts are also good. Adding more and more is warranted (again, only in certain market conditions). I want to be in any which way the turn occurs, so I don't skip the first and wait for more better entry. I get in, willing to get in some more all the way down or up to a certain precise / stop point. ( ie I shouldn't be deprived if it takes certain 'crowds' a little longer to catch on )

 

A real time example from this morning is attached. It does not have any examples of thrusts that go way past the first entry point and still being good for piling on size - but those happen all the time too. In any case, I would add more if the signal is there - whether next entry price is better or worse than first entry price.

In the first example on the attached, the price went further than the first short entry signal shown at far left arrow. Add more at 2nd red dn arrow.

In the next example price went beyond first entry twice. Add more each signal, 2nd and 3rd green up arrows.

In the next two, price did not go higher than first entry, Still add more at the 2nd red arrow in middle of illustration.

In the final two, again price did not go beyond first entry. Still add more at the 2nd green arrow.

The first signal of each of these trades qualifies the subsequent entries. If they are at even better prices - fine. If they are not at better prices - also fine. None showed on this example and I'm not taking time to go cherry pick one in history. but if they are at far better prices (as long as it doesn't go past stop loss point) - even better! Even if it looks like stupid doubling down !

 

zdo:

 

thank you for your reply and comments.

 

there are 2 types of doubling down:

 

1. double down to average up, or accumulate more position.

 

2. double down as a bail out technique.

 

 

we should not be confused with our intent when executing such.

 

I am sure there are times when doubling down can save your skin,

I do wish you luck.

 

for the mere mortals,

we should just slow down a minute and think:

if your trading technique is so good that you can use double down as a bail,

I am sure if you just stand aside and wait for a minute,

your trading prowess can also get you into the next major wave and make a major killing.

Edited July 22, 2011 by Tams

[Tams 20]

That was a great post! ...right up to the part about "really a nobody." Tams, None of us are nobody's . Not a single one of us.

...

 

Thanks

 

the nobody part was said tongue-in-cheek.

 

Honestly, only the market can tell you if you are a nobody or not.

[zdo 20]

only the market can tell you if you are a nobody or not.

 

... taking it from the sublime to the ridiculous now...

The market can not tell you if you are a nobody or now.

Nobody is a nobody...