Adding profitable positions

The tactic of adding positions has long been familiar to Forex traders; it is based on a gradual increase in the volume of profitable positions, which improves the overall financial result.

Very often, having opened the first order, you notice that the trend is moving in the desired direction and several dozen points have already been earned, nothing foretells a change in the trend, and after the first order, another one is opened in the same direction, this step is called adding a position.

But despite the apparent simplicity of the actions, there are many nuances that should be taken into account when opening a new order.

Adding Forex positions includes the following main points: correct calculation of the size of the second order, measures to preserve profits on the first position and selection of the most favorable entry point into the market.

We should not forget about control over the existing trend of exchange rate movement.

Now let's look in more detail at all the main issues.

1.    When to open a second order – after the price for the first order is already in the break-even zone and the profit is at least 10 points (for short-term trading). The trend is confidently moving in the right direction and there is no sign of an imminent reversal.

In this case, the size of the spread on the second order should not exceed the amount of profit received, for example, if you earned $10 on the first order, then when placing the second order, the losses should be no more than $5.

2.    Market entry point – a trend usually moves with small pullbacks, so the most successful entry points will be the beginning of a movement towards the main trend after a rollback (correction). As shown in the picture below.

For this reason, you should never rush to open a second position; you should wait for a correction, and it will certainly follow.

3. Size – the basic principle for choosing the size of a lot when adding a position is that losses when opening it (spread) should not exceed more than 50% of the profit on the first position.

4. Taking profit - before opening a second order, move the stop loss to the no-loss zone and take profit, do this carefully, taking into account the maximum magnitude of rollbacks.

When placing each subsequent order, do not forget about stop orders. 5. How many new positions can be added - no more than two, as practice shows that it is during this time that a trend reversal can occur, and managing a large number of orders adds additional difficulties.

To increase efficiency, you can additionally install a script for closing all positions in the trader’s terminal; with its help, you can close all orders almost instantly.

I myself sometimes use this tactic, although I add no more than one position and try to close as soon as the second order begins to make a profit.