Yeh listen up.
Before you get all down in the dumps and negative and let it affect you…
I think the dude was being a bit harsh to be honest. Dunno. Maybe just being cruel to be kind.
But I am going to be very frank with you here (although I think you already know this):
My one and only and single issue with what you’re doing to generate these gains is indeed this business of adding positions while the trade is going against you. It has worked perfectly up until now and your results show it. But this is why I asked you the other day: could your account withstand a spike such as that EURCHF debacle bearing in mind that you may have a number of positions open at the time of such spike. Same as on AUDJPY that I know you’ve just looked at on my behalf. If the answer is yes: I don’t see the problem. Spike aside: do you have a limit as to when you’re going to cut a loss regardless of how many positions you may have open on a trade and are you able to force yourself to close out even at a loss once said limit (if only in your mind) has been reached. And I know you sometimes leave trades open overnight. Could your account withstand those radical movements even if you’re not around to call it a day on the trade. Only you can answer these questions.
Now as you well know: I scale-in to full positions limited to a maximum of four signals. Let’s say for me a full position is 10 units (or lots). So I will scale-in 1+2+3+4=10. That is my limit. And the TOTAL position size is based on that formula that I was busy with on the other thread (this because like you I do not use stops so calculating position sizes isn’t easy). Point I am trying to make is that I have a set rules in place to begin with. My full and final position size is calculated before even taking the trade. And this scaling-in is very different from simply adding four (or more) full positions as and when the trade is going against me. And of course I have a very clear cut exits (profit or loss it doesn’t matter at the time i.e. I have to be out when signaled regardless). In other words: I don’t hold a trade hoping and wishing it’s going to come back to my now average price or better.
So what I’m saying is that I PARTLY agree with your mentor. But as I say: I don’t think the wording was warranted. But I also don’t know the history.
Now I know you’re not going to take the above too well. And yes we trade very differently. And yes: my gains are a joke compared to yours. All I can tell you (and you can take from it what you will): the ONLY TIME I have EVER lost money with my trading system (and by lost I mean as near as darn to wiping the account out and back at the time it was INDEED a LOT of money) has been for the very same reason i.e. instead of stopping myself when I had one full position open I continued to add to the losing position and to make matters worse it was done on an exponential basis. And it only took ONE sustained move on ONE particular trade for things to end in disaster. Actually I lie come to think of it. It’s happened twice. The year before last on the US Dollar Index. And the end result was exactly the same (well just not as bad as my Gold trade of last year). And just to add: not just me. I sat and watched somebody years ago lose $10 000 USD right in front of my eyes in the space of an hour doing the exact same thing (remember it well being GBPJPY) i.e. simply adding positions as the trade went against him. No plan. But I will admit he really had more money than sense and was not a trader by any means i.e. more of a game to him at the time. But of course he had cash to burn and was able to walk away without giving it a second thought.
Now you don’t have to answer anything. And as a matter of fact I’m quite happy to delete this post if you don’t think it appropriate. Just think about what I’ve told you. And if you do have a plan in place and you’re sure of it: then it’s really not for me or your mentor to rain on your parade. But just know that bad things can, and do, happen when you least expect it. And it is VERY difficult to cut a large loss particularly after you have been doing so well. It hurts if nothing else and depending on how large the loss is it can actually be a physical pain. Ask me how I know. No feeling in the world like it writing off tens of thousands in a single click (that took you months to generate) and then sitting back with heart racing and staring at the screen in disbelief. And it takes a long time to recover emotionally from that. Taken me over eight months this time. And nobody but nobody will be sympathetic and supportive. Mentioned before: when you’re doing fantastically you’re a hero. But lose big ONE time and you’re perceived to be an idiot (which in hindsight is probably close to the truth because you should not have lost so big in the first place).
And actually: it shouldn’t be a sad day. It’s a good day. If nothing else it’s a reality check and has given you time to pause and think about what you’re doing and how you’re doing it. And you have the answers. Just as long as you are honest with yourself with those answers.
And just so we’re clear I am not saying to adopt my scaling-in approach at all. I detail it merely to demonstrate the difference between scaling-in and doubling down (or worse). The idea being that maybe it will give you food for thought as to how you can still keep doing what you’re doing but within reasonable limits and with a clearly defined exit strategy for a loss. I suppose if you had a fixed $ amount in mind as to where you would cut a loss then it doesn’t really matter then how may positions you have open. If you can stick to that i.e. it’s not easy. But even if this is case: not something you can leave to chance overnight so bear this too in mind.