Day traders should learn to press the market and add con¬tracts at crucial trend confirmation intraday prices, moving all protective stops to break even with additional contracts. When a bull market makes new half day highs, instead of trading a one price unit size, trade two or more price units with a tighter stop. Either the market profitably explodes, or the trade is exited immediately. When building bullish trading positions, move protective loss stops to break even as new positions are added. The location ideal for the protective stops are below a previous reaction low, a trend line, or psychological resistance price. And keep on mind that you are not adding to an existing position. You have it correct when you say adding ânewâ positions. They are new positions and must be managed as such, all the while remembering that each ânewâ position is put on that much closer to the end of the move and therefore carries increased risk.
Adding to profitable trades should only be performed by profitable traders because this is an advance trading tactic that newbie or losing traders should not be doing. Also, breakeven stops when hit are losing trades because they do not pay for the cost of the trade. Thus, a profitable trailing stop in place (near the breakeven price) should always be used to pay for the trade if a profitable trade retraces back towards the entry price. Yeah...adds should be manage as independent trades as if the original entry did not exist. Good night all...have a great weekend. Mark