Position Sizing: How many of you Scale in & out?

KCalhoun

KCalhoun

Curious to discuss scaling strategies..... describe how you scale in and out, would be a useful topic imo.

For me,

Swingtrading:
+ buy under 1k worth of shares to start a new position
+ scale in every other day, or every 2 points, 2day highs, for those that trend up
+ scale out at 2day lows

Daytrading
+ I use a sequence of 2-4 trades spaced every .2 or so, using OTO orders, with .08-.2 stops, for stocks $15-$30 range
 
KCalhoun said:
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Daytrading
+ I use a sequence of 2-4 trades spaced every .2 or so, using OTO orders, with .08-.2 stops, for stocks $15-$30 range
More...
You weren’t able to make any profits doing this pre-Robinhood. Even with zero commissions, day trading stocks after decimalization sucks. There are better uses of one’s time.

Stocks are slow instruments. Not enough leverage. They are best traded at major turns, which do not come around often.

Trading stocks is uncomplicated. Read Darvas, read O’Neill. If a person can’t figure it out after reading those two, he should just give his money to someone else to trade.
 
KCalhoun said:
Curious to discuss scaling strategies..... describe how you scale in and out, would be a useful topic imo.

For me,

Swingtrading:
+ buy under 1k worth of shares to start a new position
+ scale in every other day, or every 2 points, 2day highs, for those that trend up
+ scale out at 2day lows

Daytrading
+ I use a sequence of 2-4 trades spaced every .2 or so, using OTO orders, with .08-.2 stops, for stocks $15-$30 range
More...

It seems best to scale in and out according to one’s established setups and exits according to their trading plan. Buy at perceived support if trend is not too old, and sell at resistance. Buy or sell at perceived reversion or mean areas. Scale in and out according to all of the preceding, adding a momentum indicator, such as a bar break. Adjust size according to changes in thesis, whether fundamental, event, or structural, such as contract or option expiration.
 
Echoing the sentiments above I'll happily pyramid (scale) a position to infinity as long as the underlying is trending in my direction but as soon as price pulls back and breaks down under support my mental stop gets triggered and I'm out. What I will never do is add to a losing position, oh no no no. We don't do that no matter how seductive the play looks. That's the problem with scaling into a loser, no matter how far the price drops the trade only looks "better and better" and it works every time until it doesn't then you give every dime of previous gains back. If I get into a fresh trade and it goes against me I get out and find something else to look at because obviously I'm out of sync with the first thing.

Right now I'm in several /YM contracts that I opened the initial batch of on Thursday. It's been trending up and I've been adding the whole time around consolidation levels. Things are starting to look a little shaky tonight so I may end up stopping out soon and I will close the entire trade taking profits with no regrets. However should the market keep moving up (fat chance) I'll just keep adding contracts until it doesn't. I've been trading a few years and have tried many versions of buying the dip, scaling into losers, basically Martingale-lite and I have never found a way for that to consistently work. I've also seen a lot of so-called sophisticated players fall into that trap particularly with options where they think they have an edge with elaborate OTM writing schemes and in the end it inevitably blows up cuz it was a subtle Martingale all along where they were picking up nickels in front of steamrollers with a small but certain chance of eventual catastrophic loss. The fact is no amount of sophisticated number juggling can paper over an infinitesimally small albeit certain chance of total loss and it's easy to fool yourself into thinking you have an edge when really you've just figured out a way to further delay the blowup. When they say shrewd money management isn't an edge this is what's under discussion.

In short, I sit in cash waiting for my setup and when it presents I go in the initial amount, usually sized to some leverage multiple in futures. Things go my way I add once and only once on each higher level of consolidation. When the price reverses and the setup is invalidated usually meaning a support level is broken, I get all out and reevaluate the other indexes I'm watching. If no setup is visible anywhere I wait with cash until one does. Wash rinse repeat.

While I'm most in sync with 15 minute candles, I don't distinguish between day and swing trading, only when a setup presents and then is invalidated. This could span minutes or days though usually I'll trade once or twice a day and the max might be a trade that lasts 3 or 4 days if it's in a strong trend like we've seen the indexes since Thursday. Far be it from me to artificially close a trade because I'm stuck in a "day trade" mindset or hold a trade too long because I see myself as a swing trader. I just trade the chart and take what it gives me for as long as it lasts.
 
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KCalhoun said:
Curious to discuss scaling strategies..... describe how you scale in and out, would be a useful topic imo.

For me,

Swingtrading:
+ buy under 1k worth of shares to start a new position
+ scale in every other day, or every 2 points, 2day highs, for those that trend up
+ scale out at 2day lows

Daytrading
+ I use a sequence of 2-4 trades spaced every .2 or so, using OTO orders, with .08-.2 stops, for stocks $15-$30 range
More...

It depends on the tenor of yer sax, man.

 
KCalhoun said:
Curious to discuss scaling strategies..... describe how you scale in and out, would be a useful topic imo.

For me,

Swingtrading:
+ buy under 1k worth of shares to start a new position
+ scale in every other day, or every 2 points, 2day highs, for those that trend up
+ scale out at 2day lows

Daytrading
+ I use a sequence of 2-4 trades spaced every .2 or so, using OTO orders, with .08-.2 stops, for stocks $15-$30 range
More...
Hello KCalhoun,

I am not sure what I do with day trading strategies and I really do not understand position sizing. I think it is silly.

With day trading, I do whatever I have to do to meet my daily profit goal, I do not care, because I know have Price and Context on my side. I scale in, scale out, double up, triple up , quadruple up, I just do the best I can.
 
savoir said:
You weren’t able to make any profits doing this pre-Robinhood. Even with zero commissions, day trading stocks after decimalization sucks. There are better uses of one’s time.

Stocks are slow instruments. Not enough leverage. They are best traded at major turns, which do not come around often.
Trading stocks is uncomplicated...... read O’Neill. If a person can’t figure it out after reading those two, he should just give his money to someone else to trade.
More...
%%
DEPENDS\
+ KC noted about 4 times as much on swing trading as daytrades.
William ON {IBD founder , fund manager \ WON + Co.........} did not use leverage on stocks @ all times.
JUST because WON mentioned on CNBC with a frown, he dosen't daytrade, but uses weekly charts\ that does not mean we all should skip open price like he all ways did on his charts....................................................................................................SO when you have an elephant herd +Co like skipping open price /fine \ but he never actually told all his disciples to skip open price.[Pos size+ scale in ?/ Not much @ all on longs except for occasional Maytrade daytrade]
 
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