Disliked{quote} Your scenario shows up when you appy a sort of grid, opening more position but when you are on the loosing side of the trade. Hope i understood well and answered correctly. Hi manIgnored
I don't think you understood my post correctly ... I'm not adding longs as the position is falling down against me ... I'm adding longs as its running up, and I'm in profit. I move my SL up to manage risk to lock in profits on an adverse move.
My question was as you add more and more positions, the same % swing makes a bigger % swing in your equity. This is especially true if building positions on correlated pairs. Ex: lets say you have UJ, GJ, AJ longs with 1:1 ratio and one position each. 1% move in all (since highly correlated) makes 3% move in your equity. Now you do your analysis and see JPY is falling, and should fall much more and trend for months (so these pairs all up). You add as it runs your in your favor over days/weeks, but now have 5 longs in each, so 5:1 for each position x 3 = 15:1 leverage. So a 1% move in the currency pair makes a 15% move in equity.
Much harder to watch than a 3% move! How does one handle this psychologically?
EZ