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I believe going all in at once is a bit unwise given the nature of the markets, which will almost always allow you to get in at a better price.
Let's say you want to go long 3 contracts in YM.
You get in with one contract at 13000. You keep the remaining 2 just in case you can get a better price within your stop loss range.
In this case, if you lose straightaway you only lose on 1 contract.
If you win straightaway, you'll win on 1 contract...yet it'll be a very easy and almost stress-free trade because it went your direction immediately. And I like that even if it's only a 1-contract position! |
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Good point IS, but here are some things to consider under that strategy:
1) You are hoping the position GOES AGAINST you, so you can get a better price, but not too much so your stop is not endangered... Seems counter-productive to me - you want to lose initially, but not too much.
2) On your winners where you do not enter more, it will be too easy to kick yourself in the butt thinking your profit could have been double or triple in your example.
3) You would need a 'generous' stop level in order for this to work. Since you want price to go against you so you can buy/sell more, but not 'too' much, your initial stop level needs to be at an area where you can enter more and not get quickly stopped. This can work, but I personally have stops of 4-5 ticks on average in the ES.
4) On trades that stop out, you could easily have a FULL LOAD of contracts getting stopped out and on winners might only be able to get 1/3 of your contracts into the trade... All of a sudden those winners need to be fairly large to cover the losses even if the losses are 'small' b/c you averaged down, but it was on a full boat. I personally think averaging down is a loser's game as illustrated here.
The idea could work depending on your trade setups and rules. I think your stop loss area would have to be larger (and too large for me personally) and your mentality has to accept a very counter-intuitive way of thinking.