"Scaling out" is inferior behavior

[Buy1Sell2]

Quote from risktaker:

Ok. So, since you take the position that scaling out is inferior (and I don't necessarily agree/disagree) what IS your suggested methodology that DOES improve returns considerably? Where, how and when are you suggesting people exit their trades? Hopefully you'll have a solid answer, otherwise this whole thread is just smoke from a newbie with enough time on his hands to make 3500+ posts in a few months. That's probably where you excel.

I am able to post a lot because I am trading much longer term than most here. I am not trading the open etc when you will notice that the traffic on ET diminishes greatly which demonstrates that the bulk of ET are daytraders. I am not one of those. As far as the methodology, I use trailing stops outside of reaction highs/lows. For those who prefer profit targets, they should be doing their homework and figuring out how often a trade with a particular setup yields x amount of points etc without reversal and then their trades should be let run to the target that is found to be consistent and most profitable. The main point here is that if the desirable target is 5 pts, you don't get out of any at 4 pts. It just doesn't make sense.

 

[Buy1Sell2]

Quote from Lamont_C:

If so, then you wouldn't be relying so much on the hope that you reach your "target". When you depart from your backtest and begin trading for real, you'll discover that.

LC

I have been trading real money for 26 years. My backtesting is real time trading.

 

[FanOfFridays]

Quote from Buy1Sell2:

I have been trading real money for 26 years. My backtesting is real time trading.

Oops. Now this was a slip up.

I hope you read this post over and figure out what I mean. 26 years? Hmmm....

That post more than any other makes me think that you may not have traded real money in the past.

by the way.... 3500 posts in a few months is a bit weird. After all, the question is..... why??

 

[Buy1Sell2]

Quote from traderNik:

Actually, no.

The idea that you can know what 'maturity' is beforehand is a fallacy.

As simple as it is, this idea seems really really tough for you to understand.

It seems that your approach to trading is to gamble for the big win as opposed to making steady gains. This might work. Or it might not.

My approach is to let trades run using trailing stops. Those who use profit targets can definitely determine how often a trade runs a particular number of points. It will run higher sometimes and lower others, but there can be determined fairly easily a "common" move. As far as gambling, I keep very tight constraints on losses. I am not trading to lose.

 

[Buy1Sell2]

Quote from traderNik:

Oops. Now this was a slip up.

I hope you read this post over and figure out what I mean. 26 years? Hmmm....

That post more than any other makes me think that you may not have traded real money in the past.

by the way.... 3500 posts in a few months is a bit weird. After all, the question is..... why??

What's wrong with this post? I started in 1981 and it will be 26 years very shortly.

 

[Buy1Sell2]

Quote from Bitstream:

the op has a long term passive investor mentality where scalin' out may not be the best approach to maximize profits. he has absolutely no clue about the mechanics of daytradin' since he already said he consider daytradin' and tradin' the open inferior behavior as well. just no wonder he cant possibly be aware that scalin' out is not only effective but also a necessary 'evil' in many circumstances, especially on thin issues that spike all day in matter of minutes if not seconds.

Scaling out is inferior on all time frames. It's very simple arithmetic.

 

[volente_00]

Quote from Buy1Sell2:

The main point here is that if the desirable target is 5 pts, you don't get out of any at 4 pts. It just doesn't make sense.

If you would have included this in your original post this thread would have never went this far. You still have to take into account what you want out of the trade and what the market is willing to give do not always agree. If you a had an ES trade on with a 10 point target and a 10 point stop and it ran 9 point in your favor, and then reversed, how far would you let it fall back before you admit you were wrong on the trade ? Would you let it run -19 back to original stop because of greed to make 1 more point ?

 

[volente_00]

Quote from Buy1Sell2:

My approach is to let trades run using trailing stops.

How do these stops figure into the 2% rule ?

Ex: say the trade is 20 points in your favor, what type of trailing stop will you have on this trade in order to keep noise from taking you out of it ?

 

[Buy1Sell2]

Quote from volente_00:

If you would have included this in your original post this thread would have never went this far. You still have to take into account what you want out of the trade and what the market is willing to give do not always agree. If you a had an ES trade on with a 10 point target and a 10 point stop and it ran 9 point in your favor, and then reversed, how far would you let it fall back before you admit you were wrong on the trade ? Would you let it run -19 back to original stop because of greed to make 1 more point ?

A trader who has determined that 10 is the optimal number of points would wait for the 10 without question. If the market exhibits obvious reversal,then you exit completely with no scale out. If it doesn't exhibit obvious reversal, then he will most likely get those full 10 points. Personally, I use trailing stops in the direction of the trade unless I am building a position starting extremely small. Once I get the size on that I desire, then certainly stops are in outside reaction highs/lows. What the prudent trader would do with the 9 point profit is use a trailing stop so that the -19 does not occur, while leaving the entire position on to get the 10 pts.

 

[Buy1Sell2]

Quote from volente_00:

How do these stops figure into the 2% rule ?

Ex: say the trade is 20 points in your favor, what type of trailing stop will you have on this trade in order to keep noise from taking you out of it ?

Trailing stops are always outside reaction highs/lows, never in the noise. That stop must make sense with regard to the 2 percent based upon the current total liquid net worth.