People, there is an enormous difference between doubling down on a losing position in the hopes of getting even and scaling into a position over price/time. There is absolutely nothing wrong with adding to a postion that has gone against you if it was in your initial plan to do so... Fasttrader I have always been more inclined on leveraging open profits by adding to winning positions, but if done correctly the opposite approach can also be very effective... Candle if you think that the big boys aren't 'adding to losers' or scaling in over time than you are more of a poser than I already believed... PEACE and good-trading, Commisso
I have added averaging down to several trading systems which INCREASED the profit factor, win % and over all profitability. There are almost no absolutes in trading. Trading is NOT simple. Wish people would stop saying that. Profitseer... do you mean trading execution is easy AFTER you have already found your edge? Define "trading" within the context of your "trading is simple" quote please. peace axeman
You make the most important point here (as usual Commisso). Adding to losers, i.e. scaling is only appropriate to a trader who will also add to a winner. If not the results are clear. On bad trades you will have on 2 units, on immediate winners only 1 unit. By "leaving enough room" for an extra unit at a "better" sic. price, traders are often frightened to "worsen" their average by doubling down on winners. At the end of the day consistency in size is key.
You heard from several people here. A great deal of range in their sophistication. You are correct to want to discuss stuff. And you have to really make the effort to draw people out by apppealing to their merits. Some aren't very meritorious and don't worry about that; it is a good weeding gizmo. A lot of people here have a lot of money. And they have to practice risk management as well. Once you get to setting up several independent trades, all weighed by sizing, for risk management purposes, you get to a place where your question is on the table all the time but it is construed in a different way, usually. People with capital emerge from a singular viewpoint regarding set ups as well. Often they are broadly successful in that they have opportunities frequently as the market moves along. In what you were told about that could be construded as a "zone", you saw two responses by people. One, it turned out was unilateral (the side you mentioned was a no no for the "zone"); the other answer was less risk adverse (like putting) and was bilateral in the "zone". So the task for you is to plan ahead for when you have some money. Now, this actual question, for you, has a different answer. Temporarily until you get off the ground, trade with a one ticket orientation. This means use the capital to carry only one trade at a time. Money management will tell you how many contracts are on the ticket. In fact, for people who have not made a lot of money, there is specific number of contracts that may be used. It is one. After you have more money, go to multiple contract tickets. After you have a lot of cash available but not in a single ticket trade; you go to risk management strategies that deal with "zones" for your proven set ups. You can sprinkle risk management sized lumps into zones (bilateral is a reasoned way to go). If you see another zone coming up while you have some lumps making money, you repeat the zone strategy that you have proven in. Read this and chuck it. It is just background stuff in reality. Really try to focus on entering a little laterin any trade that is possible for you and only use one lousy contract for the foreseeable future. Learn how to stay out of the market first. Then learn to get out when you are in a place you did not intend to be. Learn to enter by making the market move to your tool as it proves to you that you placed the order in the correct place for a trend to come to.
I guess a few people see my point. I would only add to a position which I believe was a "good" position to begin with, and still meets my entry criteria. For example, if I was short at 9094, I would only add another contract at 9100 if the 9100 entry still meets my entry criteria, i.e. the trend is still in my direction. -FastTrader
Staying with that hypothetical: what would your profit objective be and what would your stop be on the 2 lot?
I typically use a 8-10 pt stop-loss on YM. In this case, I would stick with the 10 pt stop loss based on the earlier position, so I would be out of both contracts at the 9104 level. Profit target would be in the 9075 area. -FastTrader
If the signal or system that you are using to trade is still giving you the same valid signal, then its ok, imo. However, most people in those situations are panicking and add to a truly losing trade in spite of their trading methodology saying GET THE HELL OUT.