What Is Your Definition Of Adding To A Losing Position?

29 Feb in bear put spreads, Blog, bull call spreads, call options, commodity consulting, commodity trading, commodity trading rules, futures broker, managed futures, managed futures accounts, Michael Seery, options broker, put options, Seery Futures.com, simulated trading

What Is Your Definition Of Adding To A Losing Position? My rule for adding to a losing trade differs from mainstream thinking because for this reason that if you buy soybeans and the trade goes against you adding to this trade would be adding to a loser, which is correct. However many traders won’t add to the soybean long position but they will buy gold or some other commodity without getting out of soybeans first.

My rule states that if you have a losing long position and want to get long another market you must exit the soybeans before you enter a long position otherwise you are adding to a loser.

Remember many commodities trend in the same direction so if you have a losing long gold position and now you’re buying silver you are basically doubling down which is a bad money management technique and this also applies to adding to short positions as well. Remember try and keep a balanced portfolio of longs and shorts so you never get top heavy on one side of the market.

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