add to a losing positon
- Thread starter otherguy
- Start date
For each type of trading you can find samples to prove it is successfully, but for the same type of trading you can also find samples to prove it is unsuccessful.
There will always be moments that throwing darts is highly profitable and there will always be moments that trendfollowing systems lose huge amounts of money.
So should you stop following the trend and start throwing darts?
In daytrading 95% of the traders will never make money consistently (i mean real money not dollars and cents). How many of the 5% successfully daytraders will come to the site of elitetrader? Probably none. So all the posters that i read overhere belong probably to the 95% losers in daytrading.
I'm probably one of them.
How many traders have a vision about what the market will do? Most jump in and out in seconds or minutes because they are incapable to guess, successfully enough to make money, what will happen afterwards.
I know more people who lost by adding to a losing position than there were winners. But like on every thread: everybody seems to be very successfully in what he is doing. 95% of the traders think they belong to the top 10% of traders.
I predicted the bottom of april,20 in the S&P 48 hours in advance and posted it on the internet. The posting can still be found.
I showed a few times charts proving that you can see 1 or even more hours in advance how long you have to stay in a position. This approach of the market needs a vision, you cannot gamble with a position for hours or days. You can do that for seconds or minutes, but that has nothing at all to do with trading, i call that gambling.
And to me the opinion of gamblers have no value at all. Only the opinion of traders is worth reading it, because they trade, they don't gamble.
There will always be moments that throwing darts is highly profitable and there will always be moments that trendfollowing systems lose huge amounts of money.
So should you stop following the trend and start throwing darts?
In daytrading 95% of the traders will never make money consistently (i mean real money not dollars and cents). How many of the 5% successfully daytraders will come to the site of elitetrader? Probably none. So all the posters that i read overhere belong probably to the 95% losers in daytrading.
I'm probably one of them.
How many traders have a vision about what the market will do? Most jump in and out in seconds or minutes because they are incapable to guess, successfully enough to make money, what will happen afterwards.
I know more people who lost by adding to a losing position than there were winners. But like on every thread: everybody seems to be very successfully in what he is doing. 95% of the traders think they belong to the top 10% of traders.
I predicted the bottom of april,20 in the S&P 48 hours in advance and posted it on the internet. The posting can still be found.
I showed a few times charts proving that you can see 1 or even more hours in advance how long you have to stay in a position. This approach of the market needs a vision, you cannot gamble with a position for hours or days. You can do that for seconds or minutes, but that has nothing at all to do with trading, i call that gambling.
And to me the opinion of gamblers have no value at all. Only the opinion of traders is worth reading it, because they trade, they don't gamble.
The problem with adding to losers is that it dilutes the effect of the winners.
I have two tradeable moves today, the first a big winner the second a loser. But if I add to the second one I get a third winner. Trouble is in order to do this I without added risk I have to cut my trade size in half on all trades and when I do that the initial winning trade is diluted. If I simply trade my normal size on everything then I am increasing risk.
Go to the extreme for example sake. What if I added small amounts every time price went down one tick? Then I would have huge positions in the losers compared to tiny positions in winners.
I have two tradeable moves today, the first a big winner the second a loser. But if I add to the second one I get a third winner. Trouble is in order to do this I without added risk I have to cut my trade size in half on all trades and when I do that the initial winning trade is diluted. If I simply trade my normal size on everything then I am increasing risk.
Go to the extreme for example sake. What if I added small amounts every time price went down one tick? Then I would have huge positions in the losers compared to tiny positions in winners.
add to winners, not loser...its plain and simple, but it works!
Everything you always wanted to know about adding to a losing position, but were afraid to ask:
http://www.amazon.com/exec/obidos/t...103-8408407-5974261?v=glance&s=books&n=507846
http://www.amazon.com/exec/obidos/t...103-8408407-5974261?v=glance&s=books&n=507846
This has been a good thread, thanks for all the responses. As for me I have a note stapled to my forehead, I WILL NOT ADD TO A LOSSING POSITON!!!! Never more never more.
Now if I can just get myself to add to a winner. It is one thing to learn when to fold em but you also got to learn when to hold em and raise the bet.
Now if I can just get myself to add to a winner. It is one thing to learn when to fold em but you also got to learn when to hold em and raise the bet.
Everybody can point to the stories of the blow ups, have you ever taken the time to research those who have success with the strategy? My guess is probably not.
Adding to losers, or averaging in, or whatever symantecs you want to use to referenece the strategy has both a time and place that it works well. The "herd" on here is strongly against the notion of adding to losers, I humbly submit that I will be taking the opposite position and continue with my practice of averaging into my losers.
Good trading to all!
Mike
Yes i took the time and i my conclusion was: if i close my bad entry and reenter later on at a better price i have two advantages:
first: i don't have the risk that you have while the quotes are going in the wrong direction; you are never sure that the quotes will revers in your advantage and you surely don't know when that will happen
secondly: taking a small loss and reentering will give a better total return with less risk
What do you mean by averaging your loss? If you lose 1000$ on a bad entry, you cannot recover that loss by taking a second position. The loss stays. I would cut the first loss and take the two positions at the second entry. My total profit will always be higher, and the risk will be smaller.