Experienced trader feedback wanted - doubling positions when in a loss

Discussion in 'Strategy Development' started by silvermotion, Jul 31, 2007.

  1. Hello fellow traders

    I have a small question about position doubling. One of my trading buddies Trades using the murrey math in sim and he doubles positions on the russell 2000 and SP500 eminis every 2 points the trade goes against him. (start with one contract on entry, then 2, 4, 8 ,16, 32, 64) Of course that allows him to escape bad trades with at least break-even. In the end, in sim, he ends up with zero losses and daily gains, everyday.

    Id like to have some feedback from experienced traders about the long term viability of this way of trading. personnally, i believe he will tank his account) because in sim you can double forever, not in live) when he goes live using this strategy.


    Gabriel H
  2. I can't imagine this any different than playing roulette and betting on red, and then doubling your bet on red each time you lose until you win.

    If you have infinite money, then sure, that'll work.

    But a simple $50 bet becomes over $25,000 after 10 iterations.
  3. Doubling down once or even buying a 3rd block the same size as the first two isn't so bad if your initial position is small enough and that's part of your plan.

    Doubling your position every 2 points as the market goes against is a sure fire way to go bankrupt. It won't happen very often that the market goes 20 points against you, but it WILL happen and when it does, your friend is done.
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  5. j1900q


    It will work if you have the Guts, and one day you won't.

    trade well
  6. pkts


    Not a viable trading philosophy. What happens on the day that the market goes so far against him that he can't double down again? Risk Reward is all screwed up. Good traders are mostly humble and realize they can't do much better than 50-60% win/loss so the only way they can make good money is if they keep their losers small and let winners run for a 2:1 (reward:Risk)

    Ever heard of Victor Niederhoffer?

  7. GTS


  8. Not a good idea. Been tried my a million traders and gamblers a million times and always leads to the same thing.
  9. Hello, I am an experienced day trader

    and YES he will tank using that strategy.

    you lose 500 dollars

    next one you lose, you are in - 1500

    next one -3500

    so in 3 wrong trades, you are going home almost
  10. DHS


    I can testify to this. It is a better idea to cut your losses and get out, instead of going into hope mode.

    Not only that, but you'll hit a margin call liquidation if it keeps going against you, then you can't stack the positions.

    Why not try reversing your position, luck is on your side more with that kind of move.

    Better yet, make better trades and accept the losers. Set targets.
    #10     Jul 31, 2007