You're arguing against the premise of Regression To the Mean. I'd say this is a losing argument over the long haul. However, RTM was a very dangerous game to play the past couple of months. I'd be willing to bet that history will show quite a few RTM traders blowing up in the 8/08-11/08 period... trampled under the hooves of the trend followers.
That is the absolute truth and the market pounded that lesson into my head the hard way. I am far more careful now and adhere to my mental stops diligently. I realized that most of my profitable trades go in my favor immediately and I can set a stop to b/e or better right away. I had many trades where I averaged in when they went against me, but only in extremely overbought/oversold conditions (such as at intraday highs/lows AND 52-week highs/lows) and they were all profitable. However, I don't even do that any more because it's simply too risky IMHO. I have a different philosophy now: If the trade moves against me and I stop out with a very limited loss, I can re-enter the trade at a better point and this tactic limits my risk immensely.
I agree with this 100%. Although, for a few specific 5 to 10 day swing trades in the last 3 months I must admit I purposely violated this rule. Went back to the old add more to the loser waiting for the bear rally. Worked well in most cases and overall, only because research continued to point the right time and direction. Looking at each individually would be scary from a psych point of view so not to be done often and not to be done on HOPE. When I listen to that "hope feeling" the market does what it does, which translates to beating my "hope" to a pulp.
I scale in and out. Acrary has some good post in the archives if you dig for them with ideas about scaling in. Ultimately its just a way to have smaller losses and more capital on with big wins and longer runs on winners. The only way its "inferiour behaviour" is if you have a crystal ball and can buy the low and sell the high of a move..