In the last lesson, we talked about how to scale out of a trade. Now it’s time to flip the script and learn how to scale in to a trade.
Let’s start with a situation that’s a bit controversial—adding to a trade that’s currently going against you.
This is a tricky move and honestly, it’s not something new traders should be doing. If your position is clearly a loser, adding more just means losing more. Makes no sense, right?
But… there’s a small exception.
If you're adding to a losing trade intentionally—with a well-thought-out plan—and your total risk (from both the original and added position) is still within your comfort zone, then it might be okay.
To safely do this, you must follow some strict rules:
✅ Rules for Scaling In to a Losing Position:
-
A stop loss is a must—and you have to stick to it.
-
Entry levels should be pre-planned—no guessing on the fly.
-
Position sizes must be pre-calculated to make sure total risk stays within your limit.
📊 Let’s Look at a Trade Example:
Say EUR/USD dropped from 1.3200 and consolidated between 1.2900 and 1.3000 before breaking even lower.
After bottoming near 1.2700–1.2800, the pair pulls back to the old consolidation area.
You believe the pair will continue lower, but you’re unsure of the exact turning point. Here are a few ways you might enter:
Entry Option #1:
Short at 1.2900 (bottom of the previous range and now potential resistance).
Con: The price might climb to 1.3000, and you’d miss a better entry.
Entry Option #2:
Wait to short at 1.3000 (top of the range and a psychological resistance level).
Con: It might never reach 1.3000, and you’d miss the move back down.
Entry Option #3:
Wait for the price to test the resistance area, then fall back below 1.2900 before entering.
Pro: This gives you confirmation that sellers are back in control.
Con: You could miss getting in at a better price.
Entry Option #4:
Why not both? Enter at both 1.2900 and 1.3000.
Just be sure you plan all of this before the trade.
🧮 Now Let’s Build the Trade Plan:
1. Determine Stop Loss Level:
You decide 1.3100 is your “I’m wrong” level—this is where you’ll exit.
2. Set Entry Levels:
You plan to short at 1.2900 and 1.3000.
3. Calculate Position Sizes:
You have a $5,000 account and are willing to risk 2%, or $100 total.
-
Entry #1:
-
Short 2,500 units at 1.2900
-
Pip value: $0.25
-
Stop: 200 pips → Risk = $50
-
-
Entry #2:
-
Short 5,000 units at 1.3000
-
Pip value: $0.50
-
Stop: 100 pips → Risk = $50
-
Combined risk = $100, which is within your limit.
🧠 Recap:
You've now scaled in by splitting your trade into two entries—keeping your total risk in check.
Your combined position is 7,500 units with an average price of 1.2966. Your stop loss is 134 pips away, and your target (for a 1:1 reward-to-risk trade) would be 1.2832.
And because most of your position was added at the better price (1.3000), EUR/USD doesn’t need to fall far to hit your profit target.
See? Smart scaling can work—if you plan it right.