Overview ~ Open Cost Av.
What is Open Leg Cost Averaging
The OPEN CA tab is for advanced trades where you build an overall position made up of 2 or more individual trades that you place as price moves against you.
CA stands for Cost Averaging, and you are keeping all of your trades open as you add addition trades to your aggregate position, rather than close one trade as you open another.
The Open Leg CA tab is like the Scale In tab of the Calculator, in that both help you figure position size for multi-leg trades where all the legs are still open as you place more trades. They differ in which way price is moving as you place your trade.
- Open CA: you place trades as price moves against you;
- Scale-In: you place trades as prices moves in your favor.
Which trader has more losses?
The market is going to turn exactly HERE at this price
The market is going to turn somewhere in this RANGE.
The trading technique of building a position within a range of price may save you from loss after loss that comes from trying to nail an exact entry point.
Many forms of trading involve recognition of a pattern or setup that often results in a predictable move, which in turn can give us an edge of probability in our trading – just what we’re looking for!
But while a pattern may be easy to identify, there are always variables around it, such as precisely where the pattern kicks in, or when a move may pick up steam.
How often do you see that you’ve called the trade right, only to have been stopped out before it takes off in just the direction you predicted?! FEATHERING-IN or BUILDING A POSITION is a technique you may want to try to lessen the frustration.
The OPEN CA tab of the Advanced Calculator will let you do this while staying within your risk profile.
Trade Example Write-Up
Here is a 3 page PDF we have written up for you explaining this idea – click to download:
Screenshot of Tab
See at a glance what your risk to reward will be for the complete aggregate set of trades. The Risk factors are shown in the red box at the bottom left; the Reward factors are shown in the green box at the bottom right..