Why hedging (averaging down) becomes pointless: explained with diagrams of averaging-down markets and trending markets
Reasons why averaging down becomes meaningless
Because it is meaningless, it is meaningless
That is, in markets with strong trends, you cannot make it work
Even if you could, you won’t make a profit
There are significant latent risks
There are many latent returns that appear
That is averaging down
In reality, even if there are many profit patterns
In reality, the amount of losses booked is large
So the means to endure that collapse
Averaging down isn’t designed to guarantee losses
It is in a state where losses are easy to occur, a pattern of losing has formed
That happens because a trending market appears,
and it ends in whether you turn or not
Ultimately, if you keep resetting the diagram in your head like poker, you cannot continue to profit
If the turn fails, the trend continues dragging in that direction
So, averaging down exists within a poker-like framework
If you do not fully understand this,
you will picture a pattern of losing with a move as small as a coronavirus move
A poker-like sense is necessary for averaging down
Because a trend is occurring, the trend is not absolute
That sense is not necessary; all of that is false
The correct answer does not come from start to finish
Everything is accidental and not all are correct; it is just a result
Looking at the result, "now is a trend-following time," "now is contrarian," "this year is averaging down," "next time is a trend"
that is the mindset
From the beginning, market logic keeps changing and rearranging
The law of rearranging that pattern never changes
Because,
In the market’s fundamental mechanism
A averaging-down market appears first, then a trending market continues to appear
Most of this pattern
Therefore, the correct approach is that it is right not to set a limit in a trend-following automated trading
In reality, there is no pattern in the market—“it exists and doesn’t exist”—that is the market
An imaginary market (lol); there is truly nothing to laugh about
What exists
Averaging-down market → trending market
as a transformation
Range itself does not exist
What exists is only a trend
Thus, the answer at this moment is that the diagram of averaging-down market is fine, right?
A trending market is the actual concept of the market, and that is the correct answer
And that does not intend to be the correct answer; that is the nature of a trending market
The stronger the trend market, the longer it lasts
Until then, as if priced in, it returns to the indicators
That is how it is built
From the beginning, nothing exists
Everything is solitary, and everything is full of fakes
Everything is machine-like; that is the market
Because there is no answer from the start and no absolute rightness
By embedding into automated trading’s trend-following,
Choose to engage in poker-like trades with simple compounding
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