Expanding on losing trades helps traders “lower” their buy price before the asset eventually goes in the direction of their trade.
But expansion is not for everyone.
After all, you can never be sure that the asset will eventually trade your way. Will you still be able to make good trading decisions if the price continues to trade against you?
Fortunately, there is a way to know when you should consider expanding into a losing position:
Just ask yourself, “Self! Is this part of my plan?”
If your answer is “Heck yeah, I knew the price He could Hit these levels! I do sizing, not warranty!“Then walk away. Follow your trading plan and get that bread (or not).
But if scaling up means risking more than you initially thought you’d lose, or if you’re doing it just so you don’t screw up for a little longer, then you, my friend, are relying on hope.
Do you know who else depends on hope? Those who swipe right on dating apps, Princess Leia and gamblers.
When you rely on hope, you turn a blind eye to current circumstances and hope that the market will turn back in your favor.
Hope will not give your trade better odds. Most importantly, it will not protect your account.
Instead of hoping, use your energy to reevaluate whether it’s time to cut your losses. Notice how you can prevent similar losses in the future and find trades with better odds.
Remember, there will be other trading opportunities available, but you won’t be able to take advantage of them if you mess up your account trying to be right!