It's a bad idea. Here the reason & the rationale: One should always have a fresh list of trade candidates. This list should be sorted (scored & ranked). One should trade from that list only, not do any "reversing the trade". B/c by that you turn yourself 180 degrees around. This is not healthy One should keep direction and specialize in one direction only...
%% OK; best way to go bankrupt. Even faster way bankrupt is do that leVeraged shorts in SPY or ES; Almost as good to bankrupt is leverage dumb down that on single stocks \oops GM + DAL went bankrupt. WHEN the trend main changes , best way to max loss is do that dumb down add on; able to afford huge loss is not good money management Bear Stearns + LEH went bankrupt with too much leverage, so non retail gets bankrupt doing stupid stuff like that also . AS if his tons of research is >> than BEAR or LEH. ?? He maybe better than DAL + GM LOL
I just pulled a strategy out of my ass and automated it. So far it's performing. You have to use SnR on volatility setup.
%% Market makers + specialists reverse + profit all the time; so few bear funds last long + profit. But polar bears, black bears , buck deer, bighorn sheep, bull elephants / TX longhorns are doing fine , so exceptions to any rule.
Some traders that use stop-and-reverse add to the position each time. Theory is that eventually you get the direction correct. Better have plenty spare margin though with this strategy. I wouldn't recommend it. For example, trade in the direction of the 50 ema but stop-and-reverse every time you get a full candle closed on the opposite side of the moving average. Should work in a trending market but could get chopped in a ranging market. I think a better idea would be to use something like VWAP/Bollinger Bands/Keltner Channel/etc.. With BB or KC, maybe use multiple bands. VWAP already has multiple bands. I don't have a strategy about how/when the stop-and-reverse would trip.
Revenge based trading rarely works sit on your hands until the next SYSTEM BASED opportunity presents itself
You do run the risk of diminishing momentum if you do it too long in a session. So at some point, you have to take max loss. That's where the edge is I think, knowing when and where to exit and resume the streak again.
It has to have a reason why. Not simply you hit a stop. The market does not care where your entry, stop, reverse reentry are. You are too small. This is pretty simple concept but people ignore it. If you build the strategy to accommodate it, or around it, sure, but I would recommend you work on getting a simple direction signal, entry, and exit figured out first. No need for "master" tactics, when you are still an apprentice.
That's exactly why I did not think reversing your stop is not a good strategy to use, taking huge loss is the large thing you want for trader growing his account. I guess if you trade small enough and have unlimited amount of bullets, it could work. But he did have the discipline to stop trading after he reached certain amount of loss. So I guess that's he's holy grill. Just imagine making 6 figures and just spent it on a nice holiday and the next losing day come and you lost all of it. I can't trade like that since I have bunch of bills to pay every month.