How To Add To Winning Positions
✅Rules to safely add to winning positions:
- Pre-determine levels of entry for additional units.
- Calculate your risk with the additional units added.
- Trail stop loss to keep growing position within comfortable risk parameters.
In general, scaling into winning positions is best suited for trending markets or strong intraday moves. Because you are adding to a position as it goes your way, your average opening price moves in the direction of the move as well. What this means is that if the market pulls back against you after you have added, it doesn’t have to move as far to get your trade into negative territory. Also, you should know that scaling into winning positions in range bound markets or periods of low liquidity leaves you open to being stopped out often. Lastly, by adding to your position, you are also using up any available margin. This eats up into a margin that can be used for other trades! You have been warned!!
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