ES Journal Archive (2009 - 2010)

[NoDoji]

Quote from gkramer:

I will gladly give up a little profit at the entry to avoid big losses incurred when using all in. I quickly know w/ my setups when a trade is going to work in my favor, and I can quickly add to my position.

Do you only scale into trades that go your way?

A trend-follower may want to join a trend on a pullback to the trend line, isn't sure exactly when price will pivot (slightly above, at, or below the TL), and so scales in 1/3 slightly above, 1/3 at, and 1/3 slightly below the TL, with a stop that fits his/her risk mgmt plan.

A counter-trend trader expecting at minimum a pullback from an oversold/overbought state with the possibility of catching a meaty reversal into a new trend may want to build into a full position starting at the oversold/overbought condition with contracts added even as price continues further (again with risk mgmt rules adhered to).

I watched an Oliver Velez live trading demonstration in which he scaled into a "loser" as it pulled back to the TL. On one trade he began taking profits as the trend resumed in the direction he expected. In another trade he felt the price action had weakened and he closed out the position for a small loss.

I found it odd that he was scaling in to a long position as price continued down rather than waiting for confirmation of support at or near the TL.

I'm more comfortable going "all in" to a confirmed setup rather than scaling into a either a winning or losing position in advance of actual confirmation, but I can also see the value in it.

 

[No.Heat]

It's a breath of fresh air to see some discussions on position management.

Want to take the opportunity to thank those participating for stimulating the topic.

Everthing I know I was taught and after several years of trading day in day out I still use the same approach.

I enter full size and reduce it as the trade goes against me.

Works for me.

Best of trading to all of you.

No Heat

 

[NoDoji]

Quote from No.Heat:

I enter full size and reduce it as the trade goes against me.

The more I think about this, the more I like it. I'm adding this to my trade management arsenal. Thanks.

 

[gkramer]

Quote from NoDoji:

Do you only scale into trades that go your way?

Typically yes. However, my setups use key S and R. I will add to a long, for example, at a lower price if in hindsight the add is closer to the S level that I felt I couldn't get at the initial entry.

For example, one of my top 3 setups is a trade my trading partner and I call the "drop and pop." It works 80-90% of the time and uses key intraday S on range bound / oscillation days. The drop is a one or two step setup. I'll add to the drop entry if I see it's a two step setup and I initially entered on a one step setup belief.

But, I never ever ever add to a losing trade for the sole purpose of lowering/raising my avg and hoping that it turns around. I am long out of that losing trade before the hope phase even kicks in.

 

[ammo]

fundamentally ,the globe is in the crapper, the market is suppposedly copying the 1929 chart scenario, i dont see any news that could suddenly boost this market. Its a rare scenario. I fell into this type of trading by accident, by not having discipline and not knowing how to use stops, i was hung a few times. By scalping in and out for a few points i missed out on a lot of bigger moves. I trade from the short side because i am more worried about the market dropping than going up. Years ago I used to be a premium seller. My trading is basically scalping and 99% of the time staying short for those occassional overnite drops, I took a big hit at sept exp, so there are losers. I use trendlines , market profile, and watch correlated markets. It's not a system, just a way to trade. http://www.fancast.com/tv/Saturday-Night-Live/10009/1275377401/Dont-Look-Back-in-Anger/videos

 

[JSSPMK]

Quote from gkramer:

Over the yrs I have practiced both scale in and all in techniques in swings and scalps. In both trades, I can unequivocally say that my accts have faired better with scale in, almost entirely due to risk abatement and significantly smaller losses on losing trades.

I will gladly give up a little profit at the entry to avoid big losses incurred when using all in. I quickly know w/ my setups when a trade is going to work in my favor, and I can quickly add to my position.

But one of the biggest advantages of scale in for me is the emotional aspect. All in losses ruin a trader's confidence. Slightly smaller profits is a small tradeoff to a better trading state of mind and smaller losses.

Fair enough, but what if your fully scaled in position goes against you, you get stopped out on full position, yet your profits may be limited due to partial entries.

 

[JSSPMK]

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2662871>

 

[JSSPMK]

Quote from Buy1Sell2:

Short term top in.

Short here at 1098.25 basis Mar 2010 with 20.
Initial stop 1121.25

Going against your own principles?

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2662938>

 

[gkramer]

Quote from JSSPMK:

Fair enough, but what if your fully scaled in position goes against you, you get stopped out on full position, yet your profits may be limited due to partial entries.

I've never said my system is superior to anyone's. It's mine and it works very well for me. I don't cut my steak w/ a pearing knife, nor do I cut my bread w/ a steak knife.

 

[NoDoji]

Quote from JSSPMK:

Fair enough, but what if your fully scaled in position goes against you, you get stopped out on full position, yet your profits may be limited due to partial entries.

I think the positive expectancy on this particular play is high enough that the winners outweigh the losers.

I often trade similarly and I have a pretty decent win %.

The scaling turns out to be supportive. Friday, I watched price move down to test test intraday support, placed a limit order just below that level, missed entry and then didn't want to chase an entry.

If I'd started a position just above support, I'd have had at least 1 car on for the strong bounce off that (nearly) double bottom, and captured a very nice move.