Many traders add on fresh contracts if the price moves against them. Personally, I think this is a poor choice to make. If you were wrong earlier, you are probably wrong now with a larger size. Occasionally, however, it makes sense to add on fresh contracts provided the odds are with you.
For example, today I went short below b4 and when the price moved against me I added on 1.75 points higher. Normally, I would be stopped out here but at this point it made sense to add on instead.
The conditions to add on for me are the following:
- The potential reward for being right is huge and the potential loss for being wrong is small: After b4 triggered, my stop was above it, so my add on position had only 4t risk but since it was a 1PB setup, the potential reward was 4 points at least, possibly 8 points or more.
- Entry is with-trend: The gap down, the strong b1 below ema, the failed H1 (already triggered) all point to at least a test of the low of b3, giving a with-trend entry.
- You were expecting a pullback due to price action: b4 had an entry side tail and most of it was overlapped by all prior bars so a pullback was very likely. Since you already expected a pullback you can enter lighter the first attempt and add on at the pullback.
- You are trading within your comfort zone: If you cannot be comfortable holding the extra contracts, you risk being shaken out mid-bar.
The following are poor reasons to add on:
- Your counter-trend trade went against you: This is the simply the best way to go bankrupt, throw good money after bad. Be a strong trader and let it stop you out. This will train your brain to enter on higher quality setups only.
- You think this will be a huge move and want to add on more contracts after the price has moved in your favor: This is usually a poor move. You should be getting out of your scalp position once the price moves in your favor, not adding on fresh contracts.