Add to winning trades. If one is on a successful trade it's wise to be able to take advantage of that stuation. In other words it is important to take advantage of a winning posftion. This is another important means to good money management. However, there is a right way and a wrong way to do this.
Never add equal or more los that you started with because the math will usually not work. Below is a smpe example that of how best to add to a posftion.
• Originally buy two los of Dollar/Yen at 110-00
• Market moves to 111.00 giving you +100 pips of profit on each lot (+ 200 pips total )
• Buy 1 additional lot of Dollar/Yen at 111.00
• Set all sops at 110.60 to ensure a profitable trade
The advantage of doing it this way means that you can't lose, but have the opportunity of sgnificant gain. Even if we sop our trade at 110.60 on all 3 los, we are still locked in 80 pips profit! To do this we must have sufficient profit in our original trade to exceed the combined sop loss of all three trades, before we can add the new posftion.
Adding to a losmg trade can often lead to excesswe losses. People do this in the belief that the trade is going to reverse.
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