【Shoukinryū-EA】"Nampin = Danger" standard misconception overturning design philosophy
“Never Averaging Down.” In the trading world, few advices are repeated as much as this. In reality, stories of funds being wiped out by averaging down are endless. Yet Shōkinryū centers on a averaging-down logic. It may seem contradictory, but this time we’ll explain why.
When hearing about people who lost funds through averaging down, a common pattern emerges. They decide the price range by guesswork, continuously add to positions emotionally each time a loss widens with a “just a little more,” fail to set an upper limit on the number of positions, and decide exits based on mood. When the market moves against expectations, there’s no stop to the losses.
In other words, the danger is not the method of averaging down itself, but the absence of pre-set rules. If you determine all the price range, lot size, max number of positions, and exit conditions in advance and execute mechanically, averaging down can be a robust technique. Shōkinryū is designed to embody this “rule-based averaging down.”
Shōkinryū’s averaging-down feature includes a mechanism where the spacing itself automatically adjusts according to price movement. When markets are turbulent, widen the spacing; when markets are calm, narrow it. This simple step helps avoid the emotional weaknesses of mechanical averaging down that can occur when using a constant price interval.
Additionally, the lot size is calculated according to pre-set rules, and there is an upper limit on total positions. As for exits, decisions are made mechanically based on the aggregate profit and loss of all open positions, eliminating wishful thinking like “it will come back if I wait a little longer.” We filled the elements that make emotional averaging down dangerous with mechanisms, leading to the current design.
- Danger is not the method of averaging down but unplanned, rule-free buying
- Shōkinryū pre-sets range, lot size, max number of positions, and exit conditions and executes mechanically
- The automatic adjustment of spacing according to price movement is the decisive difference from emotional averaging down
- The current design philosophy is the result of closing off every avenue for emotional intrusion with mechanisms
※This article is provided for information purposes and is not investment solicitation. The performance results shown are past results and do not guarantee future profits. FX/CFD trading involves risk. Please make investment decisions at your own responsibility.