How can I effectively manage infinite averaging (nampin)?>
People who want infinite averaging down have a desire to avoid locking in losses.
They want to avoid fixing losses.
As a logical concept of infinite averaging down, it is a logic that “does not fix losses.”
Therefore, it must be a logic that resolves things early.
If averaging down continues to extend, the losses only grow.
There are times when you can be saved by it, but in all cases it is a game of luck.
Therefore,
infinite averaging down must be turned into a logic that resolves positions early.
As an early-position-resolving logic,
martingale is ideal.
What this means is averaging down with martingale.
What is important at this time is
to pursue the limit lot of martingale.
Because the martingale is prone to “blow up quickly.”
Unlike normal averaging down, the amount of increase becomes orders of magnitude larger.
Because you cannot endure it,
you should keep averaging down to just once or twice.
In other words, what you are doing is a one-shot type of thinking trade.
In market terms, you view the timing as a one-shot, and then perform averaging-down martingale.
Also, since infinite averaging down means “to average down indefinitely,”
you engage in hedging (two-way position).
This way, the unrealized losses that widen can be covered by unrealized gains.
Why is that?
Because you constrain averaging-down martingale so that “the loss rate does not accelerate any further.”
On top of that, you perform averaging-down martingale against the market.
However, the market is not designed for averaging down.
Rather, it is designed to lure averaging-down traders.
Therefore, a market in which you cannot average down will come.
In such times, pyramiding is not effective.
A single-shot becomes effective.
Therefore you enter with a total lot equal to double the normal lot plus the martingale portion (that is 1 + 2 + 4).
When a trend market occurs, this can cope with it.
That becomes quite risky.
Therefore, it is a condition to trade with a low lot size.
The merit of averaging-down martingale is
Compared to the endless-down averaging-down logic, it is a trade logic more aligned with market sense.
By reducing losses, the actual total profit is realized.
I explained averaging-down martingale, but
next I will present hedged averaging-down.
Hedged averaging-down pairs well with infinite averaging down.
Because while you are in a drawdown, it becomes total profit via the drawup.
You can settle it in a daily to weekly timeframe as total profit.
This allows you to reset and start trading again.
Infinite averaging down is not appropriate as a logic unless you resolve the position.
Infinite averaging down
I think it is better to use the ideas of hedged averaging-down and martingale,”
Averaging down when used as a stop-loss trade leads to losses.
This is because, if you compare using averaging down versus a one-shot stop-loss, you’ll understand why.
A one-shot can pursue profit, but averaging down is all about “covering losses.”
“To cover losses, you bear extra losses with stop-losses, and as a result, profits cannot offset the losses.”
Therefore, averaging down is either manually cut or you continue to profit in the market to settle all at once.
To think of leveraging the weaknesses of averaging down itself is
how you can profit with averaging-down logic.
The lot size in averaging-down logic
must be set much smaller than you think.
For example, considering a high-leverage broker,
if a one-shot move of 10 yen shorts your capital,
if you do averaging down 10 times,
your capital shorts with 100 pips remaining.
Those are the characteristics of averaging down,
when thinking of averaging-down logic as infinite averaging down,
you must make it an extremely low-lot trade, more than you think.
When you employ averaging-down trades,
you must not hesitate,
so placing a limit order in advance is also an option.
If the market moves, place your limit orders there in advance.
And wait for the time.
In averaging-down trading, always choose to settle all positions.
If you do not choose that, you will inevitably lose in the market.
