"Scaling out" is inferior behavior

[Buy1Sell2]

Quote from Spooz Top:

b1s2.........you`re not qualified to make that determination being that you are not a successful intra day trader...........as a matter of fact ,you failed miserably in your self proffessing thread about your "epiphany" on why you stick to position trading.......because of your failure to trade intra day succesfully.

Actually, I am the one that proclaimed that I was a very bad day trader in my ES Journal. However, my definition of being a bad day trader was that I was not as good as I felt that I could be. I have very high standards that I hold myself to. In fact, I was a better daytrader than 90% of the daytraders out there if we use the 90% rule of day traders losing. Some in fact maintain that that the number is closer to 95% (Paul Tudor Jones has said this amongst others). You may notice from the ES Journal that I was actually fairly profitable, which by definition put me in the upper 10% of daytraders.
Thank you for nice comments concerning my position trading--It's much appreciated!

 

[Buy1Sell2]

"I guess Tudor Jones's method of always letting go some of his position before the break of resistance/support, then liquidating the rest afterwards makes him deficient. "

I am out prior to resistance/support breaking nearly always. In fact, before it happens, I have usually reversed. As successful as he may be, he would be more successful removing the entire position at once if indeed he scales out. Remember, I didn't say that you couldn't make money scaling out, I simply said that it is deficient inferior behavior( sub-optimal is the word many are using here).

 

[illiquid]

There is less and less difference these days between being a successful position trader and daytrader. How hard is it to just keep a position and not touch it? Not much at all. Then why not keep trading the intraday moves as well? That maximizes your profit potential -- "it's a given." In markets like SIF's and currencies, you cannot pick optimal exits for position trades if you don't pay attention intraday, so you'd be "inferior" in not trading the shorter time frame as well, no?

Can you tell us why you do not continue to daytrade, even though you are still profitable at it? Is it because you chose a psychologically more comfortable approach, over a profit-maximizing approach? Does that sound familiar?

 

[illiquid]

Quote from Buy1Sell2:

"I guess Tudor Jones's method of always letting go some of his position before the break of resistance/support, then liquidating the rest afterwards makes him deficient. "

I am out prior to resistance/support breaking nearly always. In fact, before it happens, I have usually reversed. As successful as he may be, he would be more successful removing the entire position at once if indeed he scales out. Remember, I didn't say that you couldn't make money scaling out, I simply said that it is deficient inferior behavior( sub-optimal is the word many are using here).

How does he make more money getting out of everything before the break? If you are out before the break of resistance/support, you are not "more successful" on that trade than someone who exited half before and half on the break. If you often find yourself reversing your position prior to support or resistance breaking, you might try to improve your exit/entry through scaling out/in

Anyways, I think I understand what point of view you are coming from, thanks for a good thread.

 

[Thunderdog]

I'd say we're all making about as much headway here as the respondents in the Intelligent Design vs. Evolution thread a while back. Guess which side I think is more steeped in dogma.

 

[Buy1Sell2]

Quote from illiquid:


Can you tell us why you do not continue to daytrade, even though you are still profitable at it? Is it because you chose a psychologically more comfortable approach, over a profit-maximizing approach? Does that sound familiar?

I don't day trade because I believe that while attempting to get all the fluctuations, a trader has a greater chance of missing the big picture. There are many many other reasons as I have outlined through numerous posts on the subject including commissions etc. There are more opportunites daytrading, but the significant money is in position trading. In addition, I do agree that position trading is much more psychologically comfortable. That cannot be argued. However, it is most certainly more profitable for most traders as well (not all). I need to point out though that this a scaling out thread. Daytrading is a subject for a different thread like the link here.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=67514

 

[JimmyJam]

Quote from Thunderdog:

I'd say we're all making about as much headway here as the respondents in the Intelligent Design vs. Evolution thread a while back. Guess which side I think is more steeped in dogma.

In one sense T-Dog, you're right.

But in another we've had a very relevant discussion about a topic which is obviously (well at least in my case) one of the most pertinent issues to trading successfully over the long-term.

Right time and right topic.

JJ

 

[JimmyJam]

Quote from Buy1Sell2:

I don't day trade because believe that while attempting to get all the fluctuations, a trader has a greater chance of missing the big picture. There are many many other reasons as I have outlined through numerous posts on the subject including commissions etc. There are more opportunites daytrading, but the significant money is in position trading ...

Right you are again B1S2, so intra-day traders only need to choose a higher time-frame and only take trades in that direction.

Regards,

JJ

 

[FanOfFridays]

Quote from Buy1Sell2:

Come on folks, my portfolio is growing as I type

So you're making big money trading, and you absolutely reject the idea that there are different ways to trade?

I have been scaling out of trades from the beginning, mainly because it seemed to me to be a good way to manage risk and more importantly, to manage myself psychologically. I catch the big moves and scaling out has enabled me to get out of situations at break even or slightly better hundreds of time, where if I had one position that I refused to break up, I would have seen a small profit turn into a small (or maybe not so small) loss. Scaling out is a great way to beat the cost of commissions, in my world.

I know, I know... if I need to scale out to manage myself psychologically, then I am not a good trader, I'm not strong enough mentally to stick to my stops, right?

The most interesting part of this is that a trader's best trait is flexibility. Your rigid thinking seems to indicate a mindset that may interfere with optimal decision making in this business.

For you to say that scaling out of trades never makes sense... doesn't make sense. Good traders are perfectly happy to establish a 'trading stake' and then trade in and out of an instrument as conditions warrant (let me be clear that I am not a daytrader and this comment does not apply to daytraders as far as I know).

Your comments also make little sense to someone who is trading in order to generate income, as opposed to someone else who is happy to increase the size of his equity.

 

[Buy1Sell2]

Quote from JimmyJam:

Right you are again B1S2, so intra-day traders only need to choose a higher time-frame and only take trades in that direction.

Regards,

JJ

I would agree with you that if you are going to day trade, that it would be best to trade with the daily and weekly trend. I think that's what you are getting at?