Trading Rules
DCA
Dollar cost averaging into a losing position: adding contracts as price moves against you to improve the average entry. Restricted or banned at some prop firms.
In plain English
Averaging down turns a small loser into a large position with a better break-even, which works until it does not, and the failure mode is exactly what drawdowns and daily loss limits are built to catch. Some firms ban adding to losers outright, others cap it through contract limits, and many allow it but watch for martingale-style progressions.
If your strategy scales into positions, confirm whether the firm distinguishes planned scaling from loss-chasing DCA.
- A trader shorts 1 mini, adds 1 more each 10 points against them, and holds 4 contracts under water.
- One more adverse swing hits the daily loss limit that a single contract never would have.