How much to add to a loser?

Overnight said:
Adding to losers and adding to winners is the same thing. You are trying to time a top or bottom, or average up or down in what is a temporary move for or against your direction.

Averaging into a loser that then goes back up is exactly opposite to averaging into a winner that then goes down. The two will cancel each other.

There is no hard and fast rule.
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That is one the most Dunning-Kruger-esque posts on ET!

1) Scale-in is not about "picking" tops and/or bottoms. Scale-in is a technique that is deployed when your methodologies and trade plan dictate.

2) Scaling-in to a loser is a technique to attain a "better" break-even point.
Scaling-in to a winner is a technique to increase ALREADY EXISTING (unrealized) profits.
NB: Losers can be longs or shorts. Winners can be longs or shorts.

3) Scale-in to a loser vs scale-in to a winner DO NOT CANCEL EACH OTHER. A failed scale-in winner will almost always exit with at least some profit. A failed scale-in loser will almost always be a bigger than initial loser. Again, methods and trade plan dictate, hence, "almost always" is my bias.
 
tiddlywinks said:
That is one the most Dunning-Kruger-esque posts on ET!

1) Scale-in is not about "picking" tops and/or bottoms. Scale-in is a technique that is deployed when your methodologies and trade plan dictate.

2) Scaling-in to a loser is a technique to attain a "better" break-even point.
Scaling-in to a winner is a technique to increase ALREADY EXISTING (unrealized) profits.
NB: Losers can be longs or shorts. Winners can be longs or shorts.

3) Scale-in to a loser vs scale-in to a winner DO NOT CANCEL EACH OTHER. A failed scale-in winner will almost always exit with at least some profit. A failed scale-in loser will almost always be a bigger than initial loser. Again, methods and trade plan dictate, hence, "almost always" is my bias.
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I have seen mention of Dunning-Kruger before. I am not of a mind to look it up at the moment, but how can what you say in point #3 be true?

If you scale into a loser, you have decreased your avg price. If it then goes in your original direction, you are amplifying your win by getting closer to BE by your original non-avg entry.

If you scale into a winner, you have increased your avg price. If it then goes opposite your original direction, you are amplifying your loss by getting farther away from BE by your original non-avg entry.
 
Why are you comparing apples and oranges?

Overnight said:
If you scale into a loser, you have decreased your avg price. If it then goes in your original direction, ...

If you scale into a winner, you have increased your avg price. If it then goes opposite your original direction, ...
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In theory there is no difference between theory and practice. In practice there is. ~ Yogi Berra
 
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tiddlywinks said:
Why are you comparing apples and oranges?




In theory there is no difference between theory and practice. In practice there is. ~ Yogi Berra
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It isn't apple to orange, it is apple to apple. I am not explaining it properly I guess.
 
tiddlywinks said:
You used the term "bet". You are gambling.

I don't gamble...
If there is not a "high conviction" (of profit), why would I take the initial trade?
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%%
Good points.
NEVER add to a loser, not to be confused with 5 minute noise.
Could add to a winner, IF its part of a well tested battle plan.
Sometimes something changes after you enter the trade I just remembered i kicked FAS out one time+ good thing i did/LOL.
AT that time it was not funny, but kicking something out[exit] was the best.
 
@trader1974 One of the most enduring sayings is cut losses early and let winners run.
 
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