Adding to losing positions | Forex Factory

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Adding to losing positions

  • #1
  • First Post: Nov 17, 2007 4:30pm Nov 17, 2007 4:30pm
Hello , I recently read about a trader who likes adding to losing positions , I would appreciate some feedback about this

is it reasonable? dangerous? scary? dumb? profitable?

andrew
  • #2
  • Nov 17, 2007 4:39pm Nov 17, 2007 4:39pm
It's dangerous, scary, and dumb.

Just my 2 cents.
Domo Arigato, Mr. Roboto!
  • #3
  • Nov 17, 2007 5:31pm Nov 17, 2007 5:31pm
i'd do the exact opposite. close losing trades and wait for the next opportunity.
  • #4
  • Nov 18, 2007 6:04am Nov 18, 2007 6:04am
So as far as I understand people do not add to losing positions? and the ones who do are kind of insane?

andrew
  • #5
  • Nov 18, 2007 6:19am Nov 18, 2007 6:19am
How and why I add to loosing positions is rather complex and not recomended for the faint of heart. I only do it when I have good reason to believe the market is in a correction phase or over bought/sold. Unless you've been trading live for a few years I wouldn't even concider adding to loosers.

You say this person likes adding to loosers. If so, he/she is a born looser.

It's best to concentrate on how winners trade and forget this nonsense.
  • #6
  • Nov 18, 2007 6:45am Nov 18, 2007 6:45am
There is a saying, "losers average losers"

I very seldom use this technique, though I have found it to be more profitable if you do it while the instrument you are trading is consolidating while in an up-trend, rather than averaging down a position where the instrument you are trading is in a strong down-trend.

My 2 cents.
  • #7
  • Nov 18, 2007 7:31am Nov 18, 2007 7:31am
Quoting Micro-MiniMe
You say this person likes adding to loosers. If so, he/she is a born looser.
Micro, I'm not picking on you but when calling someone a loser you should endeavor to spell it correctly. I just thought it was funny.
  • #8
  • Nov 18, 2007 7:34am Nov 18, 2007 7:34am
ok so as far as I understand it is not reasonable to add to a losing position and when a position becomes losing it is only reasonable to wait until the loss reaches a certain point and get out? and what about adding to profitable positions?
  • #9
  • Nov 18, 2007 7:38am Nov 18, 2007 7:38am
Quoting fx_amateur
ok so as far as I understand it is not reasonable to add to a losing position and when a position becomes losing it is only reasonable to wait until the loss reaches a certain point and get out? and what about adding to profitable positions?
Yes, but only after moving your original postion to breakeven so that you do not increase your risk. Drop down a couple time frames and look for dips to add in your direction (or peaks if you are short). You need only catch a few good trends like this a year to substantially grow your account.
  • #10
  • Nov 18, 2007 7:44am Nov 18, 2007 7:44am
well i practise even that, sometimes it works, sometimes it doesnt,..but i did it only if small pulbacks in uptrend,..well if i blew with the entry completly i might even increase margin for better entr, to get good average price,..and close it with small profit after bounce...simple,...but it feels much easier to add to winners,....
its just money
  • #11
  • Nov 18, 2007 7:51am Nov 18, 2007 7:51am
I add to losing position sometime within predefined risk range, but I never enter full risk size on opening position. I guess I'm insane?
  • #12
  • Nov 18, 2007 7:51am Nov 18, 2007 7:51am
Quoting philmcgrew
Micro, I'm not picking on you but when calling someone a loser you should endeavor to spell it correctly. I just thought it was funny.
I tried to use the spell checker and noticed that your name isn't in the dictionary. There are some interesting suggested corrections though.
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  • #13
  • Nov 18, 2007 7:55am Nov 18, 2007 7:55am
Quoting dito
I add to losing position sometime within predefined risk range, but I never enter full risk size on opening position. I guess I'm insane?
It's not my job to decide if you are sane or not (I wish it was, that would be a really cool job) but I think if you enter a position with less than 1R it is perfectly acceptable to add on until yet acheive 1R. It is not unreasonable to admit that you didn't enter at the exact top or bottom and that there is going to be an opportunity to add at a better price. Insane poeple don't establish risk guidelines and continue adding until their brokers relieve them of their position.
  • #14
  • Nov 18, 2007 8:07am Nov 18, 2007 8:07am
It is very dangerous to do, but, with sound money management and good technical analysis, one should be able to break even or come out ahead. I've done it, succeeded but would not do it again. If I take a position, and it goes against me for any reason, I go back, look at the charts, technicals and fundamentals and if I believe that my trade is a sound trade, I play it out without adding any positions, otherwise, I would just close it (very rarely).
Humble Lifetime Member
  • #15
  • Nov 18, 2007 9:04am Nov 18, 2007 9:04am
Depends on the situation and MM.

If it is within my MM rules and I have sound basis for adding to the position I will.

Under any other circumstance, I would not.
  • #16
  • Nov 18, 2007 9:45am Nov 18, 2007 9:45am
I think averaging is one of the most intelligent entry techniques.. think about this: you will almost never get a perfect entry.. the market usually drops 10, 50, and sometimes even 100 pips after you open a position, and unfortunately for you.. its against your position most of the time.

I like to cut what a full position is for me in half, and enter half when my strategy calls for it.. and enter the other half after the market pulls back even farther.

notice how im not doubling my position, but averaging in.. there is a huge difference.. if your account can only take on 1 lot at a time, then open 5 minis then another 5 minis... not 1 lot then another lot..

good luck and good trading
  • #17
  • Nov 18, 2007 10:01am Nov 18, 2007 10:01am
Quoting superdezign
I think averaging is one of the most intelligent entry techniques.. think about this: you will almost never get a perfect entry.. the market usually drops 10, 50, and sometimes even 100 pips after you open a position, and unfortunately for you.. its against your position most of the time.

I like to cut what a full position is for me in half, and enter half when my strategy calls for it.. and enter the other half after the market pulls back even farther.

notice how im not doubling my position, but averaging in.. there is a huge difference.. if your account can only take on 1 lot at a time, then open 5 minis then another 5 minis... not 1 lot then another lot..

good luck and good trading
I agree with you entirely superdezign. I do this quite often and it plays out to be profitable. If you are capable of understanding where and why price should stall in an area then reverse, then this is a strategy to gain quite a bit more profit than what you normally would have. For example, I had a trade on the Gbp/Jpy that went against my initial trade as I knew it would. I then filtered down to the lower timeframes and found a pinpoint price to enter another in. By the time I would have been at breakeven, I was in profit by around 75 pips. This makes a huge difference in your equity curve when used properly.
I dream, therefore I become.
  • #18
  • Nov 18, 2007 10:05am Nov 18, 2007 10:05am
Quoting mike w
I agree with you entirely superdezign. I do this quite often and it plays out to be profitable. If you are capable of understanding where and why price should stall in an area then reverse, then this is a strategy to gain quite a bit more profit than what you normally would have. For example, I had a trade on the Gbp/Jpy that went against my initial trade as I knew it would. I then filtered down to the lower timeframes and found a pinpoint price to enter another in. By the time I would have been at breakeven, I was in profit by around 75 pips. This makes a huge difference in your equity curve when used properly.

did the same exact thing this week.. on the AUD/JPY, but I was up around 500 pips by the end of the trade versus being down 300 pips.. not to shabby
  • #19
  • Nov 18, 2007 10:10am Nov 18, 2007 10:10am
Quoting superdezign
did the same exact thing this week.. on the AUD/JPY, but I was up around 500 pips by the end of the trade versus being down 300 pips.. not to shabby
Not at all! Thats great! I hope this week turns out as good as last week. I don't doubt that it will for a second. Good luck to you in your trades.
I dream, therefore I become.
  • #20
  • Nov 18, 2007 10:41am Nov 18, 2007 10:41am
it is very risky and should only be done with goog judgement, checking what other indicators say about near reversal. it is not for beginners
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