Only if you're really confident. Make sure that the confidence does not come from the confirmation bias of having a position move in your favor.
Adding to winners is much easier if you are swing trading as compared to day trading. Personally I will not add to a position when it's marking down, but I will push a position that is marking up for me. I saw RW, one of Ray Cahnman's floor traders, make $15M in six months on a Twos versus Tens Yield Curve Spread by adding to a winner. Pushed the living shit out of it. YMMV, I wish everyone good fortune!
I think this is very true and why I made the comment earlier that perhaps it depends on the level of noise on your time frame. On a swing time frame there is much less noise and moves are cleaner. Intraday it's crap and within those daily candles of a winning breakout there could be several failed breakouts on the 1-5 min time frame that you don't see on that daily chart. BTW that is a wild story, I'd love to have one of those hail mary trades on occaison.
There are some real advantages to learning how to swing trade. I happen to believe that swing trading has more money making potential than day trading. Just my opinion. While it is true that you are not subjected to the Bots and Algos and the HF games, to properly swing trade you are going to have to learn how to set reasonable stop-loss and profit targets. By it's very nature, you are going to be underwater on a trade until it either starts to perform or you stop out. Back to your OP, I would never recommend that a trader add to a position while it is marking down, but once the trade is starting to perform the trader could (and should) add to it incrementally as the trade moves toward the profit target. You can also scale out of the trade in terms of taking profits. Because of the expanded trading ranges involved as compared to day trading, you will want to start out swing trading with the smallest increments of risk you find find. Micro futures, futures spreads and the smallest blocks of stock are what I am suggesting. Under no circumstances should you have risk exposure that causes you to lose sleep or constantly watch the order book DOM. Being confident and controlling anxiety is a big hurdle towards becoming a successful swing trader. You will want to keep your risk profile minute while you are perfecting your trading system. Once you are building positive account equity - levering up is the easiest thing in trading to do.
For me the clue is simple - are THEY letting them in or out? If not, then add. Adding to trades works the best this way. Think of everyone in the market, think how they are possibly positioned and if they're offside. If they're offside then they need to get out (somewhere). If the market is holding firm (assume they're short), almost no retracements, bunching up, that means they know they're trapped and are trying to get out. I will then buy on stop just above some sort of mini0correlation.
dvr The trading I do is in and out. 10-15 trades a day on the 1m chart. So my adds aren't always for the big moves because they don't happen all the time. More like short at 90, add at 77, cover 1 at 73 and the balance at 65. In and out.
I don't think it's rare, at least not on the 1m chart. But I trade the Dow and because of its price, 28,000 versus the ES at 3,400, the moves look better on the chart.
Adding to a winner works well when the market is strongly trending and where you can add positions on subsequent signals in direction of your established position. For example: 1. Buy signal @ 09:35 - Long 1 unit 2. New buy signal @ 09:45 - Long 1 unit 3. New buy signal @ 09:50 - Long 1 unit I added to my position on Monday just after the Open on ES. Not on my trading computer now, but if my memory serves me correctly, the market ripped approximately 30 points higher by the first hour. I had a strong upside prediction in advance, so that gave me confidence to add. Most of my trade sequences on ES don't work out like that, though. Normally, ES usually don't move more than 10 points before retracing, so if your add-ons are wide apart you may very well add your last unit at a swing high or low. You also have the possibillity of adding to your position on a retrace back down to your entry.
More than a few adds on 1m Cable this morning. See the low around 8.30am London? Off that low the market is giving few if any opportunities, via a nice retracement, for the shorts to take their losses. Same with the longs, market giving few opportunitites to get long, apart from paying ever higher prices. This is the type of market environment where traders should look to add. Markets are cruel, so learn to use it your advantage...