@Nakotrade
Many times last year I was certain of market direction, but as is often the way it went against me. I would then "average down" hoping that it would all come good in the end, it mostly didn't and I ended up running out of capital with a depressing margin call alert.
...what was the worst of all, once I had closed the trade(s), the market went in my favour about 5 minutes later and I would have ultimately cleaned up and then some! grrrr
Basically there is a proven tendency for (especially male) traders to not to want to cut/realise their losses (and admit they have made a mistake), thus we tend to let losers run - like you have in the instance of these DOW shorts.
This is where hedging may help you... if you do it right.
My novice explanation of hedging (someone can correct me if I'm wrong) is basically protecting a position from further loss, in your case having two trades one running in either direction at the same time - i.e. +£n/point on the DOW and -£n/point on the DOW.
i.e.
You place a trade +£n/point and it goes wrong and your latent gain is now -£100, not good!
Your options are to either a) kill the trade (which as we know is hard to do) or b) you could hedge against it hoping that in X minutes time it'll come back the other way or c) wait and end up with a margin call.
So basically at the very moment where you ultimately think about *cutting the trade*, at that very point instead of killing the position just place a hedging -£n/point trade (it will cost you the spread alone), so at the worst you're not going to lose any more moular.
If the market starts moving back in favour of your first position, then who cares - you were going to cut the position anyway so it just cost you a little extra spread.
If the market keeps on moving the opposite direction to your trade, then you put a stop loss on your hedge at breakeven, now as soon as the market starts to correct and come back the other way it'll stop your hedge out and from here onwards hopefully your losses from your original position will start being reduced and just maybe you'll be lucky and come out with a profit. This is one (very roundabout) way of maybe reducing losing trades, and thus keeping your sanity/ego intact.
Practice the above on a demo account and/or speak to Markets.com and check that their platform allows hedging trades in the first instance.
...sometimes creating a hedging position can be said to be getting rid of one problem, and then giving yourself another, so it's a tricky call when to cut a position and when to hedge.
My 2 pence!
