Losers average losers?
what does this mean? I cant get my head round it........
is it simply to scale out of a losing trade?
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it basically means adding on to your position after it has already gone against you because you think your view is still correct. the idea is price will eventually move in the direction you initially anticipated, and the gains from your new position will offset the losses of your running losing position . If this quote was hanging on Paul Tudor Jones’ wall it has to be true
In trading, you are supposed to wait to enter a trade until you are SURE that price is about to explode in your direction. So, if you enter a trade (lets say you buy), being SURE that price is about to go UP....and instead...price goes down....that means that you were WRONG. If your analysis was wrong...then you are now taking a blind gamble...and "edge" is not on your side. If you buy more at these lower prices, you are now a loser averaging a loser....you are taking a less than 50% probability bet. While you might win on some of these...on greater than 50% you will lose. This is a bad strategy.
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