In terms of unrealized P&L there're two types of trades. Standard trades and weighted Trades.
Standard trades are the trades you normally place, whereas a weighted trade is a position you scale into.
The reason for this differentiation is because without this differentiation run the risk of mis-handling the position and fumbling your addition profits.
To scale into a position is a verb- its a thing you do. It doesn't differentiate between the initial trade placed (The standard trade) and the end result of scaling in (The weighted trade)
A weighted trade defined is the culmination of all the trades placed on an asset or currency pair.
So if you are scaling into a long position (Buying) and you place 4 trades in total That would be 1 weighted trade, composed as 4 standard trades.
Here we need to differentiate between actual losses and unrealized losses. If your scaling in properly your actual losses should never be greater than you standard monetary risk (what ever you decide that may be)
But when it comes to weighted trades unrealized gains and losses become a more significant factor.
I call it a weighted trade because each position added in impacts the value of a pip, Whereas in a standard trade maybe a 10 pip price movement is $150 a weighted trade can turn that 10 pip price movement into a $1000 move.
When dealing with weighted trades the amount of unrealized gains/losses is compounded which can have an impact on a traders psyche. Leading them to become anxious.
from there it could become a downwards spiral into compulsive trading and making mistakes.
Being able to identify the things that can cause you to lose your composure and knowing why becoming the effect of the market is a negative in aspect of your trading will make it easier to be cause over yourself and your own actions.
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