This is all assuming the sell signals are still present.
-FastTrader
-FastTrader
Adding contracts to a small losing position
- Thread starter EMini-Player
- Start date
We have had this discussion several times here and it usually produces a spirited debate. The two camps are pretty clear. One side says NEVER add to a loser. The other says scaling is ok, as you cannever nailk the entry exactly.
I tend to side with the first group, although if you are trading real size, scaling in does make sense. The problem with scaling in is many of the best trades go your way immediately and you will either have a half load on or be forced to chase. I guarantee if you chase it, it will reverse the minute you are filled.
There is one situation where I will double up a loser. I got this technique from the book, West of Wall Street, which is old and not that well written but it kind of pulled a lot of things together for me when I was getting started. Say you put on a trade and it goes against you but the market has a lot of chop. Wait until it's almost at your stop, then double up. If you hit your stop, blow them all out. Now here's the key. If it goes your way, get out at breakeven on the double position. The trade has already told you it was shaky by going down. All you want to do is breakeven. You're not risking that much on the additional cars and you've greatly increased your chances of a breakeven. But don't push your luck. Another key is to avoid the temptation to double up too soon. I don't do this often, but it can save your day.
I tend to side with the first group, although if you are trading real size, scaling in does make sense. The problem with scaling in is many of the best trades go your way immediately and you will either have a half load on or be forced to chase. I guarantee if you chase it, it will reverse the minute you are filled.
There is one situation where I will double up a loser. I got this technique from the book, West of Wall Street, which is old and not that well written but it kind of pulled a lot of things together for me when I was getting started. Say you put on a trade and it goes against you but the market has a lot of chop. Wait until it's almost at your stop, then double up. If you hit your stop, blow them all out. Now here's the key. If it goes your way, get out at breakeven on the double position. The trade has already told you it was shaky by going down. All you want to do is breakeven. You're not risking that much on the additional cars and you've greatly increased your chances of a breakeven. But don't push your luck. Another key is to avoid the temptation to double up too soon. I don't do this often, but it can save your day.
If 9100 is still a "good" position then why would you short at 9094?
Because I'm not a Market Wizard and can't nail the entry on the dot. 9094 was "good", so if the overall trend hasn't changed, then 9100 should be better.
-FastTrader
people might say i don't know what the hell i'm talking about, but, i do...
as some others have said, if it's just a losing position and you're upset it went against you, so you add to it, i would not recommend that.
however, IF it is part of a strategy and the strategy makes money, then it's ok.
as some others have said, if it's just a losing position and you're upset it went against you, so you add to it, i would not recommend that.
however, IF it is part of a strategy and the strategy makes money, then it's ok.
No offense intended, but if you're trading only one contract, you're probably not at the point where you're ready to make this sort of call, partly because even one contract makes you nervous.
Being a Market Wizard doesn't mean that you nail every entry on the dot. Being a Market Wizard means, in part, that you've defined your edge, you know that not every single entry is going to work out as expected, and that you're disciplined enough to follow your rules.
If you want to make this sort of fudginess a part of your plan, go ahead and try it. But you then risk triggering the sort of emotional response to a further pullback that might do more damage to your self-confidence than the trade is worth.
No offense taken
But, I hardly get "nervous" on a single contract since with the use of stops, my risk is very limited. I already know and accept the risk when I take on a trade. At times, I put in a stop order, and an order to close my position at my target exit, and walk away from the PC. Everything is pretty well defined going into the trade. I'm just trying to somehow benefit from the market's short-lived movements. I guess I might be getting ahead of myself.
-FastTrader
Quote from Fast_Trader:
No offense taken
But, I hardly get "nervous" on a single contract since with the use of stops, my risk is very limited. I already know and accept the risk when I take on a trade. At times, I put in a stop order, and an order to close my position at my target exit, and walk away from the PC. Everything is pretty well defined going into the trade. I'm just trying to somehow benefit from the market's short-lived movements. I guess I might be getting ahead of myself.
-FastTrader
Possibly. For now, play it safe and add a contract when the trade is going in your direction and not against you. These "short-lived movements" shouldn't last too much longer. Don't shoot your wad on crap.