It wasn't in cattle, but I was once short accidentally into delivery. IIRC it cost me about 100 ticks per contract to settle the underlying.
I agree with this but personally I have never lost a big sum this way, just a bit of a bleed until I realize what I am doing. Another suggestion: 32. Trying to turn a losing trade into a spread, instead of just getting out. I've had a few big losers doing that.
Because avoiding major errors is relatively straightforward if you dedicate some time and effort to it - much easier than trying to improve your performance in other ways. Also, major errors can cause gigantic losses, so eliminating them adds a LOT to your bottom line over a career.
There's no such thing as "deep pockets", a position's risk is determined in % terms not absolute terms. If Bill Gates had had on a $200 bill long S&P position in 2007, he would be broke by now. Also, trying to average down a loser, and scaling in, are two different things (at least with the definition I understand). The latter starts small and then builds up to the intended full position size. The former starts at full position size and then goes much bigger than a rational trader would ever trade. Finally, many big veteran traders have eventually lost everything by averaging down excessively against an outlier move, eventually taking on too much size & risk. If you average as a matter of habit, you are far more likely to do this than if you don't add to losers.
Averaging Down, reversing, hedging working together as part of an overall strategy is what every profitable trader does every day. Just taking a stop and re-entering a new trade with the same instrument is a form of averaging down. All part of money management which is key to living to trade another day. Just averaging down losing positions without all of the above and a solid money management plan will likely result in a blow out. Perpetual averaging down is what our government is doing with the deepest of pockets and will likely serve as an example of why perpetual averaging down inevitably fails.
I haven't been trading all that long, but I've NEVER had a positive result from moving a stop further against my position. I haven't done that for quite a while now and it's amazing how one's profits stabilize when one trades the plan.
17. Assuming you are right; not thinking of what could be wrong with your position. This is very true ...always stay humble
The fundamental problem with this approach is that the trader that adds to losers must have the maximum amount he is willing to lose in mind before the trade even begins. Obviously this amount, must abide to his sound money management. However, as the trader starts witnessing the drawdown, lack of discipline, attacks the trader and somehow trading the old plan, becomes trading a new plan, and well, then the pain begins and eventually, the monumental loss that wipes you out. Vastly different, from the intended max amount you were willing to risk before you even placed the trade.