Never add to a loser is absolutely correct. For me a losing trade is ONE TICK PAST my STOP.

Up to my stop it is still a valid trade to enter.

Hey all,

Riddle me this....

Let's say my statistics tell me that on my winning trades I have an average MAE of 8 ticks. For this example, let's assume that I am using a 12 tick initial stop.

Why would I not want to add to my position if/when price is trading against my initial entry around the 8-12 tick area with a smaller stop?

Example:

I enter using a buy stop market order on CL @ 75.11, my initial stop is $74.99. Shortly after entry, price is trading around $75.03. Why not add more here with a 4 tick stop? Statistics tell me that this is as far against me as it will go, on average. I add to my position with relatively little more risk, but the upside is potentially much larger.

If you think your initial stop is no good any longer, then why are you still in the trade? Why wait for it to hit your stop? Your stop should be placed in such a way that you know you are wrong if your stop is hit.

On the other hand, if you know your stop is good based on your experience and statistics, why not add more with a small stop (still honoring your initial stop) thus allowing a slight bit more risk, but maximizing your upside much more?

2ND part to my riddle:

Best way to handle this logistically with Ninja?

I currently do the following:

Enter trade with buy stop market order with "ATM Strategy 1", change to "ATM Strategy 2" (add with 4 tick stop) and place a limit order 8 ticks from initial entry, and then manage the exits as I normally would; possibly even look to pull off some of the trade near my original entry. Exits will and should be based on statistics and price action at the time the order is placed.

Ideally, price trades against me enough to fill my additional order, and then moves on like I expected it to move in the first place.

Something to think about......

Thoughts / comments / suggestions?

Thanks,
Gary

Here's my experience with this subject.

Scaling into and out of trades requires real skills. Never add to a loser is absolutely correct. For me a losing trade is ONE TICK PAST my STOP.

Up to my stop it is still a valid trade to enter. I can now watch for additional signals on a smaller time frame to add more even though I'm taking heat. I prefer this to taking the full position at the initial signal. I know most entries take some heat. This is common practise amongst professional traders. Adding past the stop is averaging a loser and a certain way to blow up an account!

I do this on the back of knowing my 'e' edge ratio. Divide MFE by MAE and look for greater than 2.00 over hundreds of trades. A super good day can be 20.0 and a garbage day 0.96. A good week for me is + 3.50. Knowing what causes your e ratio to suffer keeps you disciplined.

Shivaya

Why not use a second strategy based only on the occasion that a position is going against you after entry.
e.g. your Standard Entry plus a draw back of five ticks...
If that strategy works out even though with a lower frequency, you have your answer, or maybe, even a better strategy, which might be worth more risk per trade, given the smaller stop and the hopefully higher expectancy.

Locust

hey Gary,

that is absolutely OK, i do that also sometimes

its valid for me if :

- my defined entry-trigger is triggered yet
- my setup is still valid
- my initial SL is not hit yet
- my targets are not hit yet

that means the whole setup is in action + valid - so i am allowed to enter aditional positions at any place i like to.

i am allowed to enter some ticks better than the trigger was > if price comes back -
this offers a smaller SL like you mentioned - because the initial point of the SL stays fix - not the SL value but the point the SL sits on!

and i am allowed to enter in a running trade wich is in profit some ticks yet, as long as target 1 isnt hit yet
- (i can do this when i missed an entry iE )


for shure you can also try to speculate always for a better price then your initial trigger is.
you dont enter at the trigger but you try to enter some ticks better with a limitorder after the setup is triggered.
this gives you a risk of a run-away-priceaction where you dont get a fill.

that part must be added to thoughts + stats then -> is it worth to try to enter ALWAYs better than the trigger -- how much win-trades you gonna loose because market runs aways without a fill.
this is a part for the stats again.

over all - a valid + powerfull idea if you have a well defined setup.

in my eyes

I disagree with entry 1 not occurring anymore, because you cannot have a perfect entry - and if you try, you will end up missing more signals that worked than didn't, in my opinion.


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