Is adding additional lots bad idea?

[athlon]

Any recommendation on when to add more lots to a trending market? Or is it a bad idea?

[phil838]

Originally Posted by athlon

Any recommendation on when to add more lots to a trending market? Or is it a bad idea?

I don't do it so I can't give advice about it, but I have friends that add lots to winning trades and they have been successful for years! So it can't be a bad idea, as long as it's done with a proper money management plan.

[juicyt]

With my system, because I am trading with the trend I agree with adding onto my winning positions to take advantage of good trends. I treat each trade as it's own new trade regardless of the one before it. Sometimes it works and sometimes it doesn't but in the end it really is a more profitable way to trade for me. I think most Pro traders (I am not one of those) would agree that if you can you probably should.

Juicyt

[tymen1]

My candlestick trading system uses a second amount as standard practice.

You enter this amount at a specified point regardless of whether you are in potential profit or loss.

The second amount has the effect of getting you a better entry.

See the following hyperlinks......

Using Multiple Lot Positions To Improve Trading FX

and


THE JOY OF CANDLESTICK TRADING - Part 2

[hess]

If you're a trend trader mid to long term its an excellent idea. In fact most professionals employ this technique and it is known as averaging in or pyramiding. It was employed by Livermore and he wrote about it in his book. He writes it was one of the key elements in his trading system. However blindly adding to positions is a very bad idea only add positions is the prior ones show a profit not if it shows a loss. By doing so you know your trade decision was the correct one as the position shows you a profit, you were right in your analysis. There is a way to do it though. You should never add a larger number of positions as the trade progresses you have to add smaller or at least equal lots as the trade progresses some what like a pyramid. This is because the longer you are in the trade the more the chances of the trend turning and if you go on adding larger lots each time a small retrace and you will have killed all your profit.

There are ways to do it depending on how you trade just don't add blindly.

[thelearner]

I add additional positions on positions I make when I know its going or is going my way. It can be pretty risky if your making random decisions to make additional positions.

You also have to be pretty patient sometimes and refer to the larger time frames for a better understanding of the trends.

[Revone]

Adding additional lots should be based on your account size and your risk associated with it. As your account grows, you can risk more just through compounding, even though your still risking the same amount (1-2%). This is a safe and proven way to increase lot sizes over time.

Increasing lot size too soon can be detrimental.

However, another important factor is Reward To Risk. If you have a wonderful risk to reward ratio, you could add more lots and compensate the same risk through using a tighter stop.

Hope that helps.

[athlon]

anyone add more lots on a drawdown

[ThePhoenix]

Originally Posted by athlon

anyone add more lots on a drawdown

Why on earth would you do that? If you are already losing why would you add to the loss knowingly?

If you mean upping your lots after a loss when you enter your next trade, thats not good either. You would just be upping your risk with an even smaller account. IMO, it's best to compound up and compound down after a loss.

As you compound up with wins your risk percentage becomes a larger lot size. So, like others have said if your account has a nice steady increase the more you win the more you make, but you can still risk only x % of your current account.

[phil838]

Originally Posted by athlon

anyone add more lots on a drawdown

That's called "averaging down" and it will blow your account faster than anything else.

I messed around with it when I was a newbie, before I knew any better... It's dangerous and WILL cause you to lose everything.