i have had live accounts which i lost /. i am not ashamed to admit that i ahve lost accounts. that is planned. if not i would have stopped trading a llong time ago. why are arguing about something you know nothing about. my chartered accounts have given me the OK even if i am trading forex. i value their expertise not yours
The biggest mistake you can make is adding on to a position-unless you have planned for it and the original position is small
That's a real avenue of study, the adding to positions. I've tried it a few wayz and read about many others. If the market is ranging I found it's OK to add another buy, but only one time and only if the position has not crossed the puke point. Pyramiding (adding to a winner) has diminishing returns for the risk added, the further away you get from the beginning of the move, and is a lot more challenging to get right. Jesse Livermore, in his book, recommended adding only one time at the first continuation pivot, but that was for position trading of swings that last months on end. Whatever size the expected move, it seems reasonable to limit the first add to the first 1/3 of the move, when your open risk on the first buy crosses thru zero. What do you think? Did Mr. Brooks have a chapter on this?
Brooks does talk about it but there is nothing that he does not talk about. but what ever he says he is right. he does talk about trading with wide stops: in trading, as in most other things, it does help if you have deep pockets. theoretically it seems ok to add, because the market, is always testing both ways, before it decides to go in any way, on every tick. but any trader knows that the market does not do something "always." if someone is trapped then the market will not test. it will squeeze. so if you do add, it must, ONLY be, to get out at BE. and if it goes the other way, get out, and reverse. Or look to reverse, on your own terms because, if the market does not give you a chance to get out at BE, it means you are going further in the other direction and there is probably a trend. and even in the worst trade I have found the market gives you one chance to make a profit/get out at BE. Why? because the market has to trap one side, if it has to move and novices will only enter after confirmation of the move, so the market will give that confirmation and then spring the trap. if you cannot find who is trapped then consider the possibility that it may be you. what does the market do when no one is trapped? It dies! trades is a very tight range. averaging only because you are losing is suicide. but if you are adding, because the market has given you another reason, to enter or if your original premise is still valid, it is fine. what i mean, is that if you would have entered the second position, even if you had not entered the first, then it is a good trading decision. averaging, or as the pros say, scaling in, when you are certain it is a pull back, is ok, since often the pull back goes deeper than you expected. you enter what you assume is a two leg correction but it turns into 3. remember knowledge, without perspective, is prejudice and entering, without context, is gambling.
there are many things that, i heard Brooks say, over the years that, when, I first heard him say, I would think, 'what rubbish! how can it be!' sometimes after 10 years I find out : ' what! that was exactly correct' correct means it made me money. Brooks is like that. Being loyal to him pays! literally and figuratively
no give yourselves a break and listen to what i have to say. i have one aim in life: if and when i meet somebody i try to leave him richer. at the very least, i do not leave him poorer. getting rich at the expense of someone else is the way to misery because no one will look at you in admiration.
it is obvious that you should not scale in when that increases your position size to such a level that it is not advisable for your capital
Works great when the technical pattern is still range bound and next highest timeframe is trending up. Takes a lot to turn the tape on patterns that are months in the making (don't tell WXY guy I said this). LTCM and Mr. Meriweather might have made it thru that one losing patch if only they had more capital and MORE LEVERAGE! But they let goldman help them, and got squashed like a bug!