stacking positions – why?

So you know, this question i get alot. “Why do you stack positions, rather than opening just ONE big position?”. Before we answer that, lets go into how the candles are actually formed and what type of market structure is suitable for stacking positions. So if we look into basic anatomy of a candle, lets say we have a Bullish candle; it will
have a top wick and a bottom wick for the most part. Now lets say we are in an uptrend, and a 4h candle has closed bullish. So now the trend is bullish and you are looking for buys. If we look at the general way a candle is formed, it will have a top wick and a bottom wick. So now when the next 4h candle forms, you take an entry for buys, and for the sake of simplicity, in the example below you can see that there is a hard stop around 113.775
Now keeping this hard stop in mind, lets say that this HARD STOP 113.775 was at a 1h support, since we are looking at the 4h candle. So basically as you take a buy you are counting on the fact that the 4h candle will continue bullish. So now stacking positions mean, as the candle/price comes lower, you add another buy, and another buy BUT your stoploss stays the same at 113.775. It is VERY important to understand the risk you are adding here aswell. Lets say, you aim to use 5lots on this Buy trade. Now either you can have ONE 5lot with stoploss at 113.775 OR you can split it into 5 1lots, or 2 2.5lots at different price levels with ONE HARD STOP AT 113.775. Essentially when you are breaking up your lot size like this, you are diversifying your risk aswell.
For example, lets say that you have buys on with 3 1lots, and you plat to add another 2 1lots (making is a total of 5lots), and price keeps falling and hits your HARD STOPS at 113.775, so instead of losing a full 5lots, you lost 3lots. See what happened here ? Your risk was reduced. This is why some people prefer splitting their lots in multiple smaller lots.

Be very very careful while doing this, as most DONT understand risk, and will add positions blindly, and once it stops them out, they will cry “oh i lost more than what i was supposed too lose”. So dont be a dummy. ALWAYS know EXACTLY how much you will lose when your stops get hit, and you will be fine.
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