Repair Trade Position Technique in Share Trading

Here is a technique I use in my share or forex trading every so often that the trade doesn't go in the direction I want it to. And you didn't get out in time for any amount of reasons. So I present to you the technique of how to repair your trading position. This technique takes guts, confidence and guile. You are basically doubling up in the hope of raising the break even point of your original trade.

So, say you are are going short. You are strongly bearish about the stock or currency. You sell short to enter the position. But guess what? You just bought into the dip; the price takes a turn and starts looking like the bear was stung by a bee and took off like a bull. You are now in a losing position. The short term chart indicators say sell-cut your losses. The longer term indicators - 8 hour and daily charts say "hold - its only a blip on the screen".

After holding onto the losing position because you so strongly feel for the direction the price will go in the future - you start to regret not letting it go (cutting your loss quickly then turning against your original position to take the short term long). You shouldn't let those feelings invade your thinking. Instead, you watch out for the turning point - back towards the bearish zone. Once that big turning point has occurred, then you may initiate the repair stock technique in your trading.

Basically you "double up your bets" so to speak - but this isn't gambling. You used technical indicators to tell you that the balance of probability lies in your court and if it doesn't - well you must quickly initiate risk management and cut losses. You buy into another position - going the same direction as your original direction - a short. Essentially, what this does is reduce your break even point for your original position which is currently in loss. As the price heads back down - you profit in the new position, and reduce losses in your original position. Hence you have reduced the break-even point. When it reaches that point - you exit the original position and place a stop for the new position at that point. Now let the profits run for the new stock position. Good Luck in your share trading!