Exactly! Don't add to losing trades, period. If scaling in is part of strategy, then sure, but adding to a trade that qualified as a losing one? No thanks.
How much to add to a loser?
- Thread starter trader1974
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Exactly! Don't add to losing trades, period. If scaling in is part of strategy, then sure, but adding to a trade that qualified as a losing one? No thanks.
In practice it is not so simple.
If you enter with everything in one position and go wrong, then you realize that if you had averaged the entry it would have been better.
It is not easy to say which is the best.
One thing is for sure.
If for example your maximum is 2 contracts, do not add more.
If you enter with everything in one position and go wrong, then you realize that if you had averaged the entry it would have been better.
It is not easy to say which is the best.
One thing is for sure.
If for example your maximum is 2 contracts, do not add more.
So you would always be stopped out on 2 contracts and profit from 1 contract. Only makes sense if you add to your winning trades as well as losing ones (as a strategy).
Yes. Though correlation of bets and opportunity cost should be considered if the bets become meaningful to a bankroll.
Fancy terms like expectation, variance and volume can be used in not overbetting but not overbetting (however one goes about it) is more important to long-term prospering than many think.
Oh yeah adding to a loser does better the average cost of your trade, but be aware that the risk of losing on the assets and funds also increases. I’ve been reading a lot about it lately and not many professional traders recommend adding to a loser, unless you have a very well-defined investment and trading plan in line with very specific risk management strategies.