I think this is one of the biggest "diseases" traders have. A stop loss is like a red light, it's not a suggestion. It tells you to get out of the market not to add more money to the trade. It simply makes me angry to see people adding money to a losing position. It has no justification except one. HOPE! They don’t say "gee, I was wrong and should have exited in my stop loss level", they say "I am correct about the direction of the market, it's just that my stop loss was placed to close to my entry. If I hang in there and add more money the trade will surely go my way and I will not only make for the loss but I will make much more since now I am adding to my position at a much better price!".
Re: forex Tip: Never ever add to a losing position
Good to know, but sometimes people try averaging and add to blunders in their accounts. Therefore it is always advised to stay out until and unless you are very experienced in it.
Re: forex Tip: Never ever add to a losing position
Quote:
Originally Posted by anjali
Good to know, but sometimes people try averaging and add to blunders in their accounts. Therefore it is always advised to stay out until and unless you are very experienced in it.
"Millionaire Traders" from Kathy Lien has interviews with legendary traders who use Averaging to losers.
HOWEVER, they also said that they know what is the time to pull the plug-in, which is something new traders lose to follow
Re: forex Tip: Never ever add to a losing position
Quote:
Originally Posted by anjali
You are right. You seems to have a good knowledge of the market. Glad to meet you
Timings play a crucial part and forex trading is all about executing right trade at right time.
Regards
When it comes to timing, then timing of exits are more important than entries.
Newbies are so capable of making a winner to loser and vice versa.
Glad to meet you as well.
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Great point, its more than serious when the market is trending opposite your trades. I've tried a number of methods to manage that problem with little if any success. As a result of that frustration, I looked to the Expert Advisor robots and found great success in the newest weapon against losing trade positions.
Ivybot is the lastest...greatest...most up-to-datest robot I have found and in turn purchased. Im happy with it as its proven very effective, and most profitable.
Re: forex Tip: Never ever add to a losing position
You can spot these when you take note of breaks in a chart. You can then cross-verify this with stochastics by looking for the divergence in the bullish and bearish trend. You can also use Bollinger Bands to tag your scales so you will know when they reach out of range.
Re: forex Tip: Never ever add to a losing position
Quote:
Originally Posted by anjali
I think this is one of the biggest "diseases" traders have. A stop loss is like a red light, it's not a suggestion. It tells you to get out of the market not to add more money to the trade. It simply makes me angry to see people adding money to a losing position. It has no justification except one. HOPE! They don’t say "gee, I was wrong and should have exited in my stop loss level", they say "I am correct about the direction of the market, it's just that my stop loss was placed to close to my entry. If I hang in there and add more money the trade will surely go my way and I will not only make for the loss but I will make much more since now I am adding to my position at a much better price!".
It seems odd that someone sets a stop-loss
and then adds more money when it's obvious
that the market has turned against them.
Doing the opposite of what the stop-loss was
supposed to protect them from. They might
well not set a stop-loss.
My personal preference is to set a stop-loss
but would normally not allow it to be hit unless
I'm not around to watch the trade. A simple
indicator like SMA or P-SAR easily indicates a
reversal of trend and time to exit a position.
Re: forex Tip: Never ever add to a losing position
Quote:
Originally Posted by realFXpips
It seems odd that someone sets a stop-loss
and then adds more money when it's obvious
that the market has turned against them.
Doing the opposite of what the stop-loss was
supposed to protect them from. They might
well not set a stop-loss.
My personal preference is to set a stop-loss
but would normally not allow it to be hit unless
I'm not around to watch the trade. A simple
indicator like SMA or P-SAR easily indicates a
reversal of trend and time to exit a position.
Cheers!
P-SAR is slow.
SMA is slow.
Exponential moving averages work (provided you don't work on its cross over).
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forex Tip: Never ever add to a losing position
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