Scaling into losing positions helps traders “average down” their buying price before the asset eventually goes their trades’ way.

But scaling shouldn’t be for everybody.

In any case, you’ll never make sure that the asset will eventually trade your way. Will you continue to find a way to make good trading decisions if price continues to trade against you?

Fortunately, there’s a technique to know when you must consider scaling right into a losing position:

Just ask yourself, “Self! Is that this a part of my plan?”

In case your answer is “Heck yeah, I knew price could hit these levels! I’m scalin’, not bailin’!” then scale away. Follow your trading plan and get that bread (or not).

But when scaling means risking greater than what you initially thought you’d lose, or for those who’re only doing it so that you’re not incorrect a little bit longer, then you definately, my friend, are counting on hope.

Do who else relies on hope? Those that swipe right on their crushes on dating apps, Princess Leia, and gamblers.

If you depend on hope, you’re turning a blind eye to the present conditions and HOPING that the market will turn back in your favor.

Hoping won’t give your trade higher probabilities. More importantly, it won’t protect your account.

As a substitute of hoping, use your energy to reassess if it might be time to chop your losses. Pay attention to how you possibly can prevent similar losses in the longer term and find trades which have higher odds.

Remember, there will probably be other trading opportunities on the market, but you won’t find a way to benefit from them for those who blow your account attempting to be right!