I've seen your 150+ scaling *out* is inferior behavior thread, we don't need another one. Doesn't take a rocket scientist to consider risk before position size and adjust the latter accordingly. You trade your way, I'll trade mine.
Marketsurfer says short shake shack
- Thread starter marketsurfer
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I've seen your 150+ scaling *out* is inferior behavior thread, we don't need another one. Doesn't take a rocket scientist to consider risk before position size and adjust the latter accordingly. You trade your way, I'll trade mine.
For you it can look like this. There are two possible explanations:
- or I am a dreamer
- or you miss the knowledge to achieve what I posted.
I see each trade separately. Each trade should perform well. So for each separate trade the open losses should be limited.
What you propose sounds to me like saying: I have a very good system because my open losses are always lower then 0.1%. The reason why it is so low is because I only use 1% of my capital and divide the risk from this small trade over my complete capital. To me that is irrelevant. Each stop loss should be related to the amount of money in that trade, that will show how good your system is.
From the point of view of capital protection you are correct, but if the results of how I calculate are good, the overall result will be automatically good. I try to limit the risk of every trade on its own.
i960, could you explain what is the difference between scale in and average down ?
It seems quite the same, maybe scale in could be useful for buying a small cap stock, with low liquidity ?
Or would you use this approach more systematically ?
Thanks
CM
Well I trade futures but it would be common to position at a reasonable price point with acceptable risk early knowing that there may be some tree shaking / weak hand testing coming up. My usual preference is to get in on those moves but there are sometimes ambiguous areas where it might look like that either already happened or might not happen so I put a trade on with the usual target. Now if retracing starts happening and it moves against me I take a contextual look at the situation and determine how much does this threaten the trade and if it still looks valid I add to it as since I use the same stop as the original position I've now added more size with less risk than my original position. This is of course averages in to the trade but if I get stopped out I'm not taking the full adverse move against this new size - only half or a quarter of it.
Ok i see, you don't use tight stops, that is why you got some rooms to put new trades closer to your initial stop. And you want to watch how weak hands react : makes sense, it gives more flexibility.
Thanks
CM