we can now compare the 2 outcomes adding to loser vs adding to winner loser ad = max risk was 1400 winner ad max risk was 500 loser add gain max was 2600 winner add gain max was 1400 the clear choice from risk to reward is the adding to a winner. when you add to a winner you capture all the winning points where when adding to a loser you capture all the losing points. you have a cushion on your winning trade versus reducing the cushion or adding to risk by adding to a loser. you are up 200 on a trade in sp500 mini on a 1 lot. mkt was at 3000 on entry. now at 3004 3000 long 1 n mkt at 3004 up 200 3004.25 you get filled on a 10 lot buy. avg price is now 3003.83 you have 2 ticks of breathing room lets say you add a 4 lot. avg price is now 3003.4 1 lot avg price is 3002.125 so u have 2 points now or 7 ticks to loss. you have a cushion before being stopped out.
I strongly recommend to really read Volpri’s thread in and out before commenting, especially if you are not consistently profitable yet. If you are, good for you.
In your example: You scaled up. Your cost base was $3,003. Exited when market went to $3,100, you made $1,400. You averaged down. Your cost base was $2,997. Exited when the market went to $3,100, you made $2,600. You said scaling up is better???
again. volpri will never tell you or show you when he actually stops adding to a loser or what his max loss is or max position on a trade because he trades a demo acct and will just keep adding until the mkt turns. he also cherry picks his last 2 good entries before the mkt turns to make it look like those were his only entries. example. mkt is at 3000 i am showing u a strategy in a chart demo or real. i buy 1 every 2 points. so droos from 3000 to 2980. 20 points. i only show u on a chart my last 3 buys at 2980 2982 and 2984. you dont realize or see where i started buying at 3000 even!! i just cut those out!! please dont average down. its terrible advice and press volpri to truly explain how or when he exits a trade at a loss or when he stops adding. no one can just keep adding forever. what a joke
you needed a 20 point rally to get to 3010 and get those profits when adding to a loser. you only needed a 10 point rally to get 1400 in profit adding to a winner. that is the biggest difference. holding a 4 lot for the entire 20 point move or holding a 1 lot for 10 points and a 2 lot for 8 pts a 3 lot for 6 points and a 4 lot for what 3 or 4 points. thats the risk. the # of lots u have and how many points u must gain. if mkt fell 10 more points from 2990 it would be 2980 1 lot risk is down 1000 dollars 4 lot risk long at 2997 is17 points 17x4lots×50= 3,400 loss 1000 loss versus 3,400 keep thinking adding to losers is smart business. if trading is a business would you keep buying more things to sell that are losing more and more. one news blip and you are toast
chef, you should compare the profit in relation to the risk, not just in absolute profit numbers. You should compare the results with taking the same risk. Let's say you want to risk $1400, that's the risk the loser took by averaging down. If you would take the other strategy and add when the markets move in your favor, you could, with the risk at $1400 make $3920 profit instead of $2600 (the averaging down result). The math: 1400/500*1400=3920. Here is the used data: loser ad = max risk was 1400 winner ad max risk was 500 loser add gain max was 2600 winner add gain max was 1400
I traded for years without any stops on my main system. Now I'm using stops, not so much to get better R/R but for psychological reasons, although I'm seeing slightly better returns as well. Covid stocks can easily move 50 or 100% nowadays intraday, that's too much if you're trading sizable positions. For index stuff, I still go without stops. Have to be mentally prepared for the worst case scenario.