Why would you ... not be out of the first tranche? Before TA says enter a second one.
Do you not believe in stop losses?
Add the losers
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Do you not believe in stop losses?
Will you scale out of your loser ? The reality behind adding to a loser is that the price point on the original entry signal is getting progressively weaker...
In practice, for most traders - adding to losers changes the premise of the trade from making a profit to (hopefully) breaking even on it.
That's why I'm a proponent of adding to winners.
In practice, for most traders - adding to losers changes the premise of the trade from making a profit to (hopefully) breaking even on it.
That's why I'm a proponent of adding to winners.
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I am always looking for deviations from some mean. Maybe it's just how I am wired.
Here is a straight up example (a la Market Profile) of why I'll average into a position if the day's price behavior warrants it.
5 min NQ chart with VWAP and one distribution from the EU open (the second distribution starts at US open). The Initial Balance (first hour of the US session) pushes on the upper 2nd std dev of the EU session and then quickly sells down to the lower 2nd std dev. Which is my buy level.
I would not be looking for sells because the directional bias is up as price is trading above yesterdays control point (lower magenta line).
Any 5 min close at or below the lower 2 std dev I am a buyer. Sometimes price will just tag that level and race back up to the VWAP/POC and sometimes it will trade at or below that level for a bit while accumulation is taking place and weak hands are being shaken out. Either way I have a stop at the previous day's control point which is around 3 std dev of today's range.
If this simple RTM trading method is robust enough to have a positive expectancy for all the entrances around the buy level and I get the opportunity to enter a 2nd or 3rd trade with a more favorable R:R Ratio why wouldn't I take it?
Here is a straight up example (a la Market Profile) of why I'll average into a position if the day's price behavior warrants it.
5 min NQ chart with VWAP and one distribution from the EU open (the second distribution starts at US open). The Initial Balance (first hour of the US session) pushes on the upper 2nd std dev of the EU session and then quickly sells down to the lower 2nd std dev. Which is my buy level.
I would not be looking for sells because the directional bias is up as price is trading above yesterdays control point (lower magenta line).
Any 5 min close at or below the lower 2 std dev I am a buyer. Sometimes price will just tag that level and race back up to the VWAP/POC and sometimes it will trade at or below that level for a bit while accumulation is taking place and weak hands are being shaken out. Either way I have a stop at the previous day's control point which is around 3 std dev of today's range.
If this simple RTM trading method is robust enough to have a positive expectancy for all the entrances around the buy level and I get the opportunity to enter a 2nd or 3rd trade with a more favorable R:R Ratio why wouldn't I take it?
And what do you think of this?
I have negotiated a contract and it has gone wrong. So in the next trade I double the bet.
This I think has another debate.
You are not actually adding the losers because it is a new trade, perhaps in the opposite direction.
By making this new trade you still don't know if you are a loser or not. Doing this, many times makes you end the day positive but ... Is that correct?
It is not exactly the same as adding a loser.
I have negotiated a contract and it has gone wrong. So in the next trade I double the bet.
This I think has another debate.
You are not actually adding the losers because it is a new trade, perhaps in the opposite direction.
By making this new trade you still don't know if you are a loser or not. Doing this, many times makes you end the day positive but ... Is that correct?
It is not exactly the same as adding a loser.
I never trade without a stop-loss. But the initial trade's SL would not be so close to entry that it triggers which triggers while the TA is still so positive.
Alright, maybe occasionally I would be compelled to cut the first trade because of lack of free margin due to other open positions, not as a general rule.
Will you scale out of your loser ? The reality behind adding to a loser is that the price point on the original entry signal is getting progressively weaker...
In practice, for most traders - adding to losers changes the premise of the trade from making a profit to (hopefully) breaking even on it.
That's why I'm a proponent of adding to winners.
My preference is to add to winners which have already made a gain equivalent to the capital risk. I can then move the SL on the initial trade to b/e so it becomes a free trade, while the second trade has a SL of no greater, so my account capital at risk never increases.
But it can happen that price pulls back sufficient to not trigger the initial SL and not seriously weaken the TA either, especially when following a smooth trend.
Most likely your stoploss is misplaced.
Actually when you trade, if you really have an advantage, you shouldn't add losers or double the number of contracts.
It is simple.
Tossing a coin has a 50/50 chance that it will come up heads or tails.
In trading since the beginning of the markets there have always been trends.
So let's say you trade in favor of the trend.
You can have a hit rate for example of 65%.
If you always negotiate 1 contract it should be enough to give you an advantage.
It can improve?
My conclusion is yes.
Adding a winner when you are in a good trend.
You can also negotiate fewer contracts if the price is in a side phase.
My conclusion is that you should always negotiate a standard lot, add the winners or negotiate a smaller number of contracts (but always the same).
if the market has no trend. I think this can make a difference.
It is simple.
Tossing a coin has a 50/50 chance that it will come up heads or tails.
In trading since the beginning of the markets there have always been trends.
So let's say you trade in favor of the trend.
You can have a hit rate for example of 65%.
If you always negotiate 1 contract it should be enough to give you an advantage.
It can improve?
My conclusion is yes.
Adding a winner when you are in a good trend.
You can also negotiate fewer contracts if the price is in a side phase.
My conclusion is that you should always negotiate a standard lot, add the winners or negotiate a smaller number of contracts (but always the same).
if the market has no trend. I think this can make a difference.
Check his live trading videos out, all he does is add to losers, when a position goes against him he says oh thank you for letting me get that price, if it keeps going against him he keeps adding and keeps entering orders to add more as the price goes against him, I guess some people call adding to losers as averaging in or scaling in.
https://www.youtube.com/user/ClayTraderVideos/videos
https://www.youtube.com/user/ClayTraderVideos/videos
If you have to add the losers then you have no advantage.
It is simple.
Your correct answers must be above 50%.
If your correct answers are not above 50% then you have no advantage.
Sometimes the profit is not greater than the risk either.
Adding losers is playing with fire.
Remember that you must also pay the commissions.
It is simple.
Your correct answers must be above 50%.
If your correct answers are not above 50% then you have no advantage.
Sometimes the profit is not greater than the risk either.
Adding losers is playing with fire.
Remember that you must also pay the commissions.