As a trader you should never add to a losing position!

Most traders add positions to a losing trade to average their entry price. This is hazardous to your trading career. Averaging down into a losing trade is the only thing that will assuredly make you lose a bulk if not your entire trading capital. Most losing traders use this strategy.

Sometimes averaging into a losing trade may work for you. But over time it will eventually ruin you. This is one of the main reason why LTCM, Barings and Sumitomo Copper went bust.

If you want to be a profitable trader always add or average into a wining (profitable) trade. Add on to your positions in the direction of the profitable trend.

The correct attitude for successful trading is to let the market tell you what to do. If the market says to go long, buy, and if it starts to go down, sell. This sounds easy but it is much more difficult than you think. We always like to believe that we can be in control. We want to be in control of our trading and of the market.

As a trader if you accept the fact that you cannot control the market, and all you can control is your execution of trades, you will take a great step toward being a successful trader. Instead of trying to control the market, let the market tell you what to do. Let the market and your trading system take you long rather than you personally trying to predict or decide when to go long. Let your system take you out or get you short. Once you realize that you can’t understand the market, and that you can’t predict when the market will move, you will move into that detached state of mind where you let the market take you where it will when it wants to.

Trying to control the market is not good for two reasons. First, you lose money. How much you lose depends on how well you are managing your money and controlling your risk. Second, trying to control the market affects your judgment, this causes you to try to reconfirm your judgment or belief is correct. This forces you to take more losing decisions.