I guess the reason I ask is because of the posters who appeared to be highly profitable, they were trading stocks. Many say they didn't have an edge with futures. Others say they liked options for various reasons, but I didn't see many guys posting who talked about their trades. Was just curious if there was a common theme.
The S&P 500 has topped at 2430 on 6/1/17
- Thread starter volente_00
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It should be a common theme anywhere. You definitely don't want to be adding to a position up to your full size when it's going against you. Sure I don't think adding to a temporary loser is the end of the world but you're better off adding to something that's proving itself right rather than adding to something where you want to prove YOURSELF right.
Just know when to GTFO.
I guess its one of those things that depends on the circumstances. My stops are so tight that often, just after I get stopped out, price does at least come back to my entry. So instead of stopping out, I added another contract right there, it would be profitable. Of course, it doesn't always work out like this, and I haven't done the stats to show if its viable, but I do think its acceptable with tight stops, especially if you've seen that your entries and stops would benefit from it. But I would absolutely much prefer adding to a winner than a loser.
Of the people who I've seen do this, they say they only add 3 times, or maybe add twice for a total of 3 entries, and then if they are out, that's it, done, many days worth of profits gone, but hopefully something like this only happens once every few months.
I've actually done statistical analysis for adding to losers. And more recently, I've had a few clients do it as a means of corporal punishment... 
And I've also heard Chip Kenyon, one of the best CBOT Bond Traders EVER, tell a packed audience room that adding to losers was, and I quote, "a disease".
One of my personal mentors, David Ellis, routinely fired traders for doing it. On the spot. Locked up their TT screens remotely and escorted them straight out the door. He'd much rather see you take a loss on a 500 lot than keep adding 100 lots to a stinker as it got stinkier.
I know for a fact that several Bond traders on the floor sought psychological counseling in order to stop the practice of adding to losers. In the early 1990's a psychiatrist gave a presentation at a CBOT-sponsored conference about "adding" as one of the primary psychological sabotage mechanisms. There's truly some cognitive reasoning faults and bad emotional behaviors at work...
And I've also heard Chip Kenyon, one of the best CBOT Bond Traders EVER, tell a packed audience room that adding to losers was, and I quote, "a disease".
One of my personal mentors, David Ellis, routinely fired traders for doing it. On the spot. Locked up their TT screens remotely and escorted them straight out the door. He'd much rather see you take a loss on a 500 lot than keep adding 100 lots to a stinker as it got stinkier.
I know for a fact that several Bond traders on the floor sought psychological counseling in order to stop the practice of adding to losers. In the early 1990's a psychiatrist gave a presentation at a CBOT-sponsored conference about "adding" as one of the primary psychological sabotage mechanisms. There's truly some cognitive reasoning faults and bad emotional behaviors at work...
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You can get pretty good at working yourself out of losers but sometimes the market just doesn't come back and you get hammered. Most people who add to losers have trouble taking losses. If you can't take your pre-defined loss, you are pissing in the wind as a trader. Take your loss, maybe you will get a re-entry...if not, wait for the next signal. If you have a system with a positive expectancy, losses don't matter.
IMO there are basically two main dysfunctions:
- Loss aversion / FOMO (they're related enough they might as well be the same).
- Using the market to prove out a dysfunctional need to be right.
I've actually done statistical analysis for adding to losers. And more recently, I've had a few clients do it as a means of corporal punishment...
And I've also heard Chip Kenyon, one of the best CBOT Bond Traders EVER, tell a packed audience room that adding to losers was, and I quote, "a disease".
One of my personal mentors, David Ellis, routinely fired traders for doing it. On the spot. Locked up their TT screens remotely and escorted them straight out the door. He'd much rather see you take a loss on a 500 lot than keep adding 100 lots to a stinker as it got stinkier.
I know for a fact that several Bond traders on the floor sought psychological counseling in order to stop the practice of adding to losers. In the early 1990's a psychiatrist gave a presentation at a CBOT-sponsored conference about "adding" as one of the primary psychological sabotage mechanisms. There's truly some cognitive reasoning faults and bad emotional behaviors at work...
If you bought 1 share of VRX at 200 and added 100 shares at 10...you'd technically be adding to a loser but would still make money
It's all relative
Winning trades will take care of losing ones. If that's not an integral part of your method, then you have to re-think whatever it is you're doing. I don't add, but sometimes and that's not often, I'd extend my stop loss from 1unit to a maximum of 2. Very rarely, whenever I see a potential macro turn I'd risk more in light of making more, but I'd never scale into a trade, makes no sense whatsoever.
Nice pullback time to go back up today.
Did you even read what Bone wrote? He said you would not be permitted to fade a strong multi day/week/month trend and hold it underwater a long time unless it was hedged. If you think an 85 point stop in the ES is silly 'no matter how well capitalized any institution or individual is' then you are just just showing yourself to be clueless on who the market participants are and how they operate.