Slightly theoretical but mostly up for a fun discussion is the idea of letting a position go against you--
For the general purpose, the setup is....if someone was going to risk $250 on a trade, and if the position went against him, to add a position and risk another $250 on both positions---
So what would theoretically have better odds or "just be better" in ya'llz opinion--
To have 1 position and just give it a much wider stop or have 2 positions (as an overall trade idea) and scale in against you-
I'll start off that I'd think giving wider room is better, as markets mostly just run orders and gyrate up and down and the odds are if a market moves against you a bit where it shouldn't you should be looking to work an exit instead of just closing....
The motivating question for me was on a statistic basis for ES.....as I'm not a statistician or mathematician--- Is is statistically advantageous to risk 5 points on 1 position and then add there----then if market moves another 5 points against you to close out---
or just have 1 position and risk 15 points---
Now I know this has nothing to do with market context or "support and resistance" or entry and exit areas----but just looking at managing a trade--
If the market is trending against you, then you should not double up against you
However that said, there is always, at some point in time a mean reversion, means the
market, even if it is going in a direction, it will (slightly) go back to the mean.
15 points may be OK if you are swing trading from a daily chart, but totally inappropriate if you are a day trader using a 5 minute chart. Know what type of trader you are and act appropriately. Know when you are wrong and reverse your thinking.
By holding on to losing trades, you are missing a trade in the opposite direction as well as having a large losing trade.
Here is a 4K tick chart from Friday. If you had taken a short at low of day and held on until a 15 pts stop loss was hit, you would have missed the large up move, by stubbornly hoping that price would change direction, despite order flow showing that price was going up on aggressive buying.
Just using a fixed stop loss without understanding the ongoing price action is going to end in pain.