Millionaire Tradersto initiate the trade, affording only a minor bit of currency pair
diversification. But as I became more familiar with the currency
pairs, I preferred one over the other. It is far more likely that I
would actually trade one currency pair that I felt most comfortable
with and maybe on occasion initiate a total of two or three separate
positions at any given time.
Q: So basically a total of maybe three positions, no more than
that at any time?
A: Right.
Q: Do you ever average down?
A: I am not a proponent of adding to a losing position, and
recently I took a 6 percent loss on one account I manage, because
I averaged down against my own rules and then could not—per my
money management guidelines—add enough later on. So I exited
the position at the maximum loss I allow myself to take, and boom!
The trade turned just a bit later on. Whenever I break my rules, I
get burned.
I prefer instead to add to winning positions, and those have
been my big winners. When I’m on the way to a profit target that I
have tested to be better than 80 percent accurate, there are stages
along the way where it makes sense for me to capitalize on the
good decision. It’s not enough for me to always just let it run the
course to profit—I want to maximize to the full extent the possible
profit because my equity is growing as the trade is profitable, I can
add positions and still keep my risk low.
I like to use the analogy of a relationship. If you are in a terrible
relationship, and you can see that it’s not working out the way that
you wanted to, you should end the relationship. We’ve all been in
relationships we should have ended more quickly. Trading is the
same—if I’m in a position that is not doing what I expected it to do,
I don’t need to last it out or put more time and effort into it. I get
out and move on. Conversely, if I am in a good relationship, I want