When Adding Positions Follow These Guidelines
a. Add only to winning positions.
b. Never add to a losing position. One of the most important money management rules that a trader should never break is ‘Never add to a losing trade’.Trades are split into winners and losers, and if a trade is a loser, the chances of it turning right around and becoming a winner are too small to risk more money on. If a trade is a winner but looks like a loser, wait until it shows you what it really is before you add to it.
c. If you do this you will notice that nearly always the trade ends up hitting your stop loss and does not look back. Sometimes the trade turns around before it hits your stop and becomes a winner and you can count yourself very fortunate. Sometimes the trade hits your stop loss and then turns around and becomes a winner if this happens you can count yourself unlucky. Whatever the result, it is never worth adding to a losing trade, hoping that it will become a winning trade. The odds of success are just too low to risk more capital in addition to the initial risk.
d. It comes down to good money management practices and learning how to trade using trading rules.
Tagged With Forex market, forex strategy, forex tips, Forex trading
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