The main reason is that once you take your profit on the initial trade, the trade is over. Let your winners run. Adding to a position that is moving in your direction accomplishes this. Entering a trade with a small or partial position keeps your losses small when you are wrong and you only add to the trade when you are right. FWIW: I'm referring to swing trading equities.
Stock trading in and of itself is not legally anything, especially not a business. A business may engage in the activity of stock trading, but one does not have to be incorporated as a business or LLC or partnership whathaveyou, LEGALLY, to engage in it.
The Income Tax Department of India clearly states that any trading capital that represents a profit has to be considered as a business income
Actually I did treat all the trades separately, though not with a fixed target. I set the stops the same (below the start of the uptrend - though I would never have let the market get to that stop if it looked as if the trend were over), but I'm not a fan of targets. Trader Tom interestingly isn't either. It seems to me that you should take profits when it looks as if there is not much more to be gained, rather than at some pre-defined level. Al Brooks tries to quantify reasonable targets with his measured move stuff, but I'm not entirely convinced by it, though he may well be right as I am sure he is a better trader than me. Setting them by some arbitrary risk/reward ratio also seems odd to me. The market might give you one point, it might give you twenty, who knows? So I exited some of the trades when they had made a reasonable profit, and held some for longer in case they went further. It seems to me that another advantage of scaling in is that you can scale out as well. As for scaling in to losers; I have had similar royal experiences with stubborn trades of which you speak in simulation, so I am wary of it. Still, I think there may be some mileage in it if it is done carefully with a clear head. Tricky when you are under water though.
You guys gotta understand, Trading is really BIG in India atm, bit like you Guys and Guns and shooting at each other. Don't listen to these Mericans, @rajesheck , they play that weird game with an over-sized Toothpick. They wouldn't even know who Sunil Gavaskar, Sachin Tendulkar or Shane Warne was.
Adding to winners will make your returns lumpier: deeper and longer-duration DDs but more impressive winning streaks. My approach is to manage based on signals. If you are long, and the market flashes another long signal, add to the position and manage & account for the add as a separate trade.
Why deeper drawdowns? If you are managing your position properly the losses should be small. One big winner makes up for a lot of small losses. I suppose if you are only trading one instrument like ES a losing streak will cause a deep drawdown. With stocks I am diversified (Up to 10 positions) and my account value rarely has a drawdown over 5%
Hey Good luck to both India and Australia on WTC!! Today final fifth day of the Ultimate Test Match at Oval! I am a big fan of these three: Mohammad Ali, Bruce Lee and Don Bradman (I see Manny Pacquiao (Pacman) as boxing version of Bruce Lee) Ofcourse Sachin Tendulkar vs Shane Warne episodes are epic of this century! All these legends showed the magic of Flow State in sports and martial arts to the world.