"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
T-Dog,I get the impression that OP basically eyeballs a limited sample and most likely in one or 2 assets.He presents no statistical evidence that his claims are substantiated,and scaling out is indeed inferior...I would suggest the folowing,and assume someone who is so bold in his claims would have the "evidense" at hand
B1S2,
You could very easily put an end to this by simply picking a portfolio of stocks,i.e NDX 100,SP500,and running a simulation over a time period that trended,traded in a range,had high volatility as well as low,and had large runs up and down.2000-2008 would work for me..
To simplify,lets trade a trend following system and a reversal type system.Keep it simple.Run an optimisation and tell me if one was better served with 100%(or close) liquidation or some form of scaling out with 2 scale out points.Obviously the odds are against your claim,but if > 85% scale out at the first profit target comes out on top,you are the chosen one.I would suggest you optimise the scale out target as well(1 ATR,2ATR etc....)
Look at absolute returns vs risk adjusted returns..
I am waiting with T-Dog
Enlighten us
Quote from Buy1Sell2:
The post really didn't warrant a reply. The undeniable math has been laid out and it is inarguable. You sort of leveled a personal attack which I don't respond to.
Your whole thread is a personal attack on others that scaling out is "inferior" behavior.
So i think the Mr. Kettle is calling the Pot black...
Your math is incorrect... it is very arguable... and was so done...
your concepts are simplistic... and highly flawed...
and your oversensitivity is very selective... and amusing
Have a Great Day...
<img src="http://www.enflow.com/p.gif">
Tao, here's the rub. This is not about comparing systems ie trend versus reversal. It has nothing to do with that whatsoever. It has to do with trades inside of the same system. I have already posted the math for that. It's a very simple and accurate premise/equation. Thanks for the post!
Quote from EdgeHunter:
Your whole thread is a personal attack on others that scaling out is "inferior" behavior.
So i think the Mr. Kettle is calling the Pot black...
Your math is incorrect... it is very arguable... and was so done...
your concepts are simplistic... and highly flawed...
and your oversensitivity is very selective... and amusing
Have a Great Day...
<img src="http://www.enflow.com/p.gif">
What I attack is scaling out/in, not the individuals who employ it. The math is undeniable. The concepts are simple--I agree. This is the way to trade--simply. Thanks for the contribution!
Quote from Buy1Sell2:
What I attack is scaling out/in, not the individuals who employ it. The math is undeniable. The concepts are simple--I agree. This is the way to trade--simply. Thanks for the contribution!
I was not attacking you only your lack of a proper education...
Just like you are not attacking others only their inferior behavior...
May The Wind Always Be At Your Back Lad...
<img src="http://www.enflow.com/p.gif">
Quote from Buy1Sell2:
What I attack is scaling out/in, not the individuals who employ it. The math is undeniable. The concepts are simple--I agree. This is the way to trade--simply. Thanks for the contribution!
Your math is flawed... Yes 2+2 is 4 is simple math, you have that right at least... but 4 may not be the required answer to multi-dimensional decision that requires one to correctly hedge a option spread in a volatile market, etc.
Life is not simple...
Yes, the execution of a trade is simple - as in click a mouse...
But the arriving at a decision to trade or exit a trade is a very complex exercise... and modern math, not simplistic Newtonian math, is more applicable to the true dynamics of trading...
Scaling is not an inferior process, look around you, it happens everywhere... and in almost every human interaction...
Scaling is a part of life...
<img src="http://www.enflow.com/p.gif">
Ishmael, today people like Volente could have quite possibly banked numerous primary target wins, they would never agree with your statement. They are slaves to the whole concept of being there and raking in win after win, no matter how big or small the gain is, it's like a tournament to them, been there & done that.
EDIT: Illiquid, I saw your reply, nobody is talking about illiquid markets, apart from you and some other posters using that as some sort of justification of their need to scale out.
Quote from Buy1Sell2:
I have, The scaler "thinks" that they have been right more.
Precisely, so let us run your model again, this time from a scalers pov.
Four ES Contracts 50% win ratio versus Four ES Contracts 90% win ratio scaling out at half target.
9 pt target 3 pt initial stop loss
1st example with 20 trades
10 winners for 9 X (4 contracts) = 360 pts ($18000)
10 loser for 3 X (4 contracts) = 120 pts (-$6000)
Net profit $12000
2nd example with 20 trades
18 winners for 9 X(2 Contracts)=324 pts ($16,200)
18 winners for 4.5 X(2 Contracts)=162 pts ($8,100)
2 Losers for 3 X(4 Contracts) =24 pts (-$1200)
Net profit $23,100
Scaling in this case turns out to be more profitable.
We can all amuse ourselves with models and screenshots for ever and a day, but the day we pull the trigger and enter the market is the day our life changes and reality is king.
From paper tiger to market tiger in a manner of speaking.
regards
f9