Adding on to Winning Trades

Snagit screen capture
http://screencast.com/t/1bxgCV84

This is a good time to talk about add on trades inside of a trend. The trade pictured above is an obvious candidate to do so. I believe the trend will continue for macro reasons and all of my rules for a trade have been satisfied, so I have to  risk assess an add on trade. There are several factors of that risk assessment that must be thought through before and add on trade is taken:

1. How much to risk? If the trade takes off back to break even on my initial trade, what will i lose on the add on trade and is that within my risk perspective?

2. Are you comfortable with it? Will it make the trade more stressful and spend emotional capital if I add on to it?

3. And finally, is it just greedy to add on to a trade?

What are some of your ideas concerning adding on to trades? Do you do it? Any good or bad stories about adding on to trades?

Happy Trading!!

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