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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ekn who wrote (48849)	5/1/2000 11:50:00 PM
From: Michael Watkins	Read Replies (2) \| Respond to of 99985

I started to slowly build a new short position and will cost average up Now don't get me wrong, I trade on the short side probably more often than long, but I have an analogy for cost averaging (long or short) to share. Cost averaging and pyramiding always looks great on paper when things are going our way, but as prudent investors and traders we know that not all of our calls will work for us. Its kinda like putting a live frog into a pot of water on a stove. Initially it doesn't feel so bad, and as it gets warmer, the frog starts to worry. Unfortunately at the very instant the frog knows its too late, he's cooked. At any rate, myself I prefer to follow up bars underneath (pick a major time frame - daily will do for may things) and trigger my short when price proves to me that it wants to go down. A test of top or test of swing high is what I'm looking for (amoung other things) to start me watching in earnest.