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.
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
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…
http://forums.babypips.com/analyst-arena/12562-using-multiple-lot-positions-improve-trading-fx.html
and
http://forums.babypips.com/newbie-island/19339-joy-candlestick-trading-part-2-a.html
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.
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.
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.
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.
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.
Say you enter a trade, it goes against you, and is now down -50 pips. If you enter another position in the same direction and with the same number of lots your trades only have to go up 25 pips to be back at breakeven, instead of 50 pips.
That’s the reasoning behind it, the problem is that if it keeps going down you’re toast. 
Hello,
Bill Williams (of ‘Alligator’, ‘Awesome Oscillator’, ‘Acceleration Deceleration Oscillator’ fame) uses what he calls ‘Reverse Pyramiding’ to enter a trade e.g. the first entry may be 1 lot, the next entry 4 lots, the next entry 2 lots, and single lots thereafter. That type of thing. He makes the assumption that your ENTRY is the riskiest part of the trade and therefore the 1 lot at entry. In my experience I have to say I don’t agree i.e. more often than not your INITIAL entry moves nicely in your favour (assuming of course you have a decent system and / or know what you’re doing) so, using his methodolgy, you now have your initial ‘good’ entry with one lot, and you are now going to add on 4 lots which, unfortuantely, has the effect of negatively affecting your ‘dollar average’ and, as so often happens, if the trade ‘turns’ on you, it’s usually going to happen NOT on the first / entry bar but subsequent to that. I’d say to rather ENTER with an ‘opening salvo’ of as many lots as your money / risk mangement allows and ‘Pyramid out’ as the trade goes in your favour as this, most times, effectively locks in profits. As some have also already suggested: if you’re trailing a stop loss then there should be no problem adding lots to positions as long as the overall effect of doing this does not violate your money / risk management rules. (By the phrase ‘money / risk management rules’ I’m referring to the 1%, 2%, or 5% maximum loss per trade that is the ‘general money / risk management rule’).
One thing that is not usually addressed (but I’ve come to see the merit in this): the question of when and how to increase your lot sizes for every NEW trade. Most people (myself included) have always been under the impression that it’s a GREAT idea to increase your lot size with every new trade (assuming your account balance has grown since the last trade) and decrease your lot size with every new trade (assuming your account balance has dropped since the last trade). This is actually a very BAD idea!!! Larry Williams (no introduction necessary) addresses this issue in great detail. By increasing your lot sizes on every trade as things move in your favour: it effectively means that you’re going to lose far more profit far more quickly if you run into a ‘losing streak’. He has a very good, albeit rather complicated, method of determining lot size increases / decreases as you go along (I’m not going to detail it here). Suffice to say: the simplest method I’ve come up with to date is to determine your maximum lot size, based on your money / risk management rule, for the day (period). As an example: let’s say that your capital balance at the beginning of your trading day (period) was $5 000 and your risk (the maximum that you are prepared to lose per trade) is 2% as determined by your money / risk management rule. This means that you would only ever risk $100 on any single trade. Use this figure FOR THE DAY (PERIOD) regardless of whether you’ve increased your balance during the day (period) or decreased your balance during the day (period). At the beginning of the NEXT day (period) you use whatever your capital balance is THEN for THAT ENTIRE DAY (PERIOD) (and so and so forth). Sometimes (most times hopefully) you would be increasing your lot sizes and sometimes you would be decreasing your lot sizes (assuming an overall loss from the previous day (period)). It’s simple and appears to be effective.
One thing I must hasten to add here though: these threads are ‘littered’ with ‘stories’ of failure (some ‘stories’ are more ‘spectacular’ than others and I believe my ‘stories’ fit well within the ‘spectacular’ category). I know NOW that 99% of my ‘trouble’ has been caused by little or poor or NO rmoney / risk mangement (and I’m NOT talking about ‘small change’ here)!!! I’ve come to the conclusion that no matter HOW good a trading system or methodology you have: without proper money / risk management you WILL NEVER succeed. I (now) have a trading system / methodology that works for me. The entries are almost always ‘on the mark’. But you know what: EVEN WITH this trading system / methodology I see that it would STILL fail in the long run without proper money / risk management. As a matter of fact: I also know (now) that even the WORST of the systems / methodologies I’ve tried over the years would probably ALSO have worked had I employed sound money / risk mangement!!! I think what many people do not realise (and it really is thanks to Larry Williams and his very eloquent but still ‘down to earth’ way of saying things that I do NOW realise) that ‘losing’ is as big a part of this business as ‘winning’. What many of us do not think about is ‘what if this trade does NOT go in my favour and I end up losing’!!! Most of us see our current trade as ‘the bomber’ or ‘mother of all trades’ and never think about ‘what if this trade goes against me. What then’??? It may sound very negative but always assume that your current trade is a ‘bad’ trade!!! This will ‘keep you on your toes’ and ENSURE that you ‘look ahead’ and adhere to strict money / risk mangement rules!!!
Regards,
Dale.
As I said in my first post on this thread…
My candlestick Advanced level uses this as standard.
You are in a small drawdown when you enter the 2nd lot to improve your entry.
However, to substancially reduce the danger of blowout, the following protections are built in.
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a PCI stop loss is used.
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You enter your 2nd amount only when the starc bands are returning in your favour.
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The extreme limitations are set by the Bollinger bands.
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It is possible to predict the turning points of the starc bands by watching their interaction with the Bollinger bands.
The method has been carefully tested and instead of just averaging down, this approach has a very high rate of success.