I have to agree, an integral part of my approach is to increase position when in drawdown, in fact I welcome the drawdown with open arms, more profit potential. It all depends on how you trade, if I was taking an outright directional bet though I would not increase size as you are carrying open risk.you got it backwards, not decrease, but increase. Anyway, to put an end to this, the correct answer is, it depends on the system.
Thank you epic, you saved me a post.Not true at all. There are tons of real traders who scale (average down), knowing that it is pointless for them to attempt to pick absolute tops and bottoms.
Iow, they begin taking a position as soon as their model tells them they have an edge. The difference is that they don't take a full position. The full positions might be 4-10 steps later when the model tells them that they have significant edge.
What separates "real traders" from the rest is what they do once a position is fully funded and it keeps moving against them. Also, what methodology they use to close for a profit. Real traders adjust profit targets to reflect current views, and real traders don't exceed predetermined risk limits.
In short, real traders don't Martingale in any form, but scaling can be very useful to the skilled trader.
I do much the same, the problem is that if I keep adding then the spectre of catestrophic loss rears it's ugly head, at some point the drawdown characteristics will inevitably turn into a market reversal and I don't want to be overloaded at that time. My success relies on many small- medium wins and no large or catestrophic losses.Fresh analysis will always suggest you to add.But I only add once,and if the price falls out into the zone.If it doesn't recover from that zone I see no reason to add more,I either wait till the closure or close it out.Ive spent thousands of hours testing martingaling on the different levels with all that jazz.What you are saying is just another way of guessing and hoping.That "fresh analysis" will blow your account at some point.
Hi EJ,Increasing size when the bank is in the middle of having a run on your money is encouraging them to continue with greater incentive. It's a loser strat. Adding after the price has obviously turned could be a viable strat. But you have to have a very good way to tell it has turned.
Hi EJ,
Might I suggest that you read thru the thread from the beginning paying particular attention to the posters that I thanked, you should then realize why I and others don't agree with your comment. This will save a lot of wasted effort.
Cheers John
Actually I don't care you don't agree. My post is directed at the OP. I am right and that's final.[/quote
Yes Joe, as if by magic you appear straight behind me again the previous post was 5th June 2013.lol