God Bless Averaging Up
- Thread starter Neet
- Start date
Ok, now this thread has taken on the likeness of another thread titled "Scaling is inferior" - the classic debate of whether to:
1) Go all in and all out
2) Scale in and all out
3) All in and scale out
4) Scale in and scale out
A couple of ET members pointed out to me that scaling out has its psychological benefits - and they were right on the money - for me.
Only Neet knows which one of the above works for him - because in the end, its all psychological and what works for you.
It takes balls to trade....trade on bro
1) Go all in and all out
2) Scale in and all out
3) All in and scale out
4) Scale in and scale out
A couple of ET members pointed out to me that scaling out has its psychological benefits - and they were right on the money - for me.
Only Neet knows which one of the above works for him - because in the end, its all psychological and what works for you.
It takes balls to trade....trade on bro
Like Soros says....
"When you're right on a trade, you can never be big enough"
and....
"It takes courage to be a pig"
Scaling in as the position goes in your favor is not a bad thing to do - adding to a position as it goes against you IS a bad thing to do. You add to winners, you don't add to losers. Sure, sometimes averaging down into a losing trade pays off - but sooner or later, they carry you out on a stretcher.
Maybe I read this whole thread wrong, but I thought Neet was scaling in as the position went his way.
Neet, is this what you are doing?
"When you're right on a trade, you can never be big enough"
and....
"It takes courage to be a pig"
Scaling in as the position goes in your favor is not a bad thing to do - adding to a position as it goes against you IS a bad thing to do. You add to winners, you don't add to losers. Sure, sometimes averaging down into a losing trade pays off - but sooner or later, they carry you out on a stretcher.
Maybe I read this whole thread wrong, but I thought Neet was scaling in as the position went his way.
Neet, is this what you are doing?
I added to the short as the market started to fall. Started with 1 car, when I covered, I had to cover for 30. 30 is a little high for me but since I had secured profits on 23 cars, it felt natural and very comfortable.
Scaling out naturally unloads stress from the trade because the position is smaller and the profits are in the bank but if the trade does not work from the start, ouchie.
Quote from Sponger:
Ok, now this thread has taken on the likeness of another thread titled "Scaling is inferior" - the classic debate of whether to:
1) Go all in and all out
2) Scale in and all out
3) All in and scale out
4) Scale in and scale out
A couple of ET members pointed out to me that scaling out has its psychological benefits - and they were right on the money - for me.
Only Neet knows which one of the above works for him - because in the end, its all psychological and what works for you.
It takes balls to trade....trade on bro
Fair enough. I just have problems with assertions that haven't been validated. Neet's pronunciations regarding his "method" have a very strong whiff of luck to me. Doesn't mean I'm right either, but people should treat read his initial post and consider it in a more sceptical light before moving on.
To be frank, what's he's said is meaningless. He's had a good trade and is floating on air...
Fund,
It's all about risk management.
Suppose your max car size is 10.
If the trade went wrong from the beginning on a scaling out technique, your loss is 10 x stop loss value displacement.
Suppose you average down as the trade goes against you, without going over your 10 size lot. Still quite a hit.
Now, it's close to impossible to take a 10 car hit when scaling up if you adjust your trailing stop to secure profits as you add new cars.
Worst case scenario, the trade starts, goes up, you add, goes against you, and you take a hit on 1 and a larger hit on 2, whoopie doo, no real harm done.
In my case, when I add the 3rd, the 1st one has locked in profits on a trailing stop and so forth. Every car has a different trailing stop.
You tell me which risk management you prefer.
Hope it helps.
Neet
I don't want to start debating the merits of this or that risk managemrnt strategy too much. However, your technique seems wedded to a belief that trends really do exist, semingingly regardless of volatility, and that the predictive valure of your indicators is more than negigable. I see nothing in your posts to say that the market won't turn on your method and eat it alive. In faact, it seems set to do so. Upside account volatility????lovely. Downside account volatilit???? Death. Risk to reward ratio???? Not good.