Apprentice Level
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Expert Level
Master Level

3.3 Compounding

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Apprentice Level

Compounding is when you are already in a trade and another setup presents itself. This would be a setup that you would certainly take if you were in no position.
For example: Let's say you are in a $1000 long position on NVDA which you entered when the price was at $100, and since then NVDA has now reached $200. Next, NVDA retraces 10% to $180, which has a strong support level and Fibonacci confluence for a bounce and continuation to the upside.
You are already in profit, but the market has presented a strong setup which you would certainly take if you were in no trade. So in this circumstance, you add another $1000 to NVDA at $180, while moving your stop loss up to protect your current profits.
These setups are for advanced traders and allow for one to maximise their profit potential.