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Adding positions to an open trade is an advanced trading technique that, although potentially risky if not done correctly, can magnify profits exponentially. But just like every other aspect of trading, this technique can have a strong psychological effect that may hinder your trading performance.
Not only do successful traders let their winners run, but they maximize their potential profits by adding to their winning positions when the market environment calls for this technique to be employed (ie. Trending and/or momentum market movements). Maximizing potential profits is always “awesome,” but this trading technique can bring on its own psychological issues.
Now, if you follow our guidelines to scale into winning positions, then you basically know how to create trades with limited risk and high reward-to-risk potential.
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