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Currency Futures

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  #1604 (permalink)

Legendary Market Wizard
Columbus, OH
Trading Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
Silvester17's Avatar
Posts: 3,458 since Aug 2009
Thanks: 4,830 given, 10,868 received

Big Mike View Post
I'm not sure if you are joking or not.

But, I do the same thing. I never put on a full position (all-in) in one spot. If price moves in my favor, I try to add when I believe the trade will continue in my favor. If price moves against me, I will add so long as I believe the overall trade idea is still sound.

Everyone always drills into your brain "only losers average losers", or don't add to a losing position. The trick is, like most things, context.

To me, a losing position in this regard is one where the trade has gotten away from you, it is beyond your initial stop, you've moved the stop, and you are now desperate to "average" the trade by adding to it, trying to turn a loser into a winner. That is not what I do.

I have a pre-determined stop level when I enter the trade. I am willing to add if price moves against me, but the original trade idea still makes sense, and has not taken out my stop. I also add when price moves in my favor.

BTW, it goes without saying, but this strategy really only works when you are trading bigger time frames. You can't make this work with tiny stops. I often have 40-50 tick stops and 100 tick targets, and I find this works well.


@Big Mike,

hope you don't mind my worthless 2 cents here.

I often read about that good traders are not looking what they can win, they are more concerned what they can lose. and I fully agree with that.

with that in mind, I strongly disagree with your approach. especially for newer futures traders it's not recommended imho. if you want to build a position and are willing to add to your position and hold it over a longer period of time for a bigger profit, then I would look for other instruments, like options, etf, stocks etc. (just something you know exactly how much you can lose!)

reason is risk. what happens if the market is closed and the unexpected happen? let's say you've a bigger short position in 6e at 1.27. now some central banks made a very unusual move and 6e opens at 1.75? (I know not very likely, but you never know...) now depending on your position and account size, your account might be red.

again this is just imho and not very likely to happen. but just keep that in mind.

I only use futures as a hedging and a short term trading instrument.

now I'm ready for my beating. :sos:

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