Intraday: Should we average our loses making them to profits or square it off?

kingsmasher1

Well-Known Member
#1
After a colorful flying start to my trading career for last 5 months, it made an unfortunate pause yesterday, which can take nearly years to revive :( (see here: https://tradingqna.com/t/4-lakhs-lo...f-motivation-and-caution-to-all-traders/16307)

Illness may be one of the major reasons for the indecision, but my question to all the experienced day traders here:

Suppose you are trading intraday - Should you average your loses, trying to make them to profits OR square it off taking a loss !!
I had applied this many a times in taking short positions, what goes up, comes down again, so averaging mostly works. But is it a right advisable thing?

Example:
You shorted Adaniports future 5000 size (2.5 x 2), when price was 300. It went to 302, and instead of putting stoploss, you add another 5k at 302, and your price changes to 301, and suppose it goes up, and you add another lot, and eventually it has to come down for sure.

Advantage: Your profit increases, as your lot size increases, and a stock going up, will eventually come down for sure (applies mostly to stocks which are going down in daily trend)

Kindly suggest.
 
Last edited:

suri112000

Well-Known Member
#2
Donot average a loosing trade. The market knows everything. It encourages you to average a loosing trade, and it rewards you too for averaging it for few times. During that time, the market guages your ability to withstand losses. And it gets ready to trap you even without your knowledge. Every thing looks normal and as usual like previous case.....but this time market never reverses and blasts off to other end to blow you out fully and completely. And this happens when you become over confident and euphoric and when you least expect it. Market is supreme which knows everything.
 

intellibitz

Well-Known Member
#5
Average when trade is in favor = making it favorable, big profits.
Average when trade not in favor = making it not favorable, big losses.

The right thing to do when the trade is not in favor would be to remove the position, but we don't do that.. do we?
 

okabira

Well-Known Member
#6
hi king ,
sorry to hear about your loss..

your question :
Should we average our loses making them to profits or square it off?

Answer : Square it off .

why ? because of only 1 CASE of probability.
Suppose you short sell a stock right at the bottom , expecting further move. because we dont know whether it is THE BOTTOM or THERE IS SELLING LEFT.
so logical step is to wait for pullback and if it goes few point above our entry then get out . WHY FUEL OUR LOSERS ? dont get the logic why people average .
also pl. play with stop loss . 4lac is nothing . my uncle's friend lost 38 lacs . he was averaging his future swing position. what i understood was he was stubborn with his own analysis and not accepting market's voice . burnt badly.


hope u recover slow and steady
thanks