"Scaling out" is inferior behavior

[Buy1Sell2]

Quote from J-Trade:

Buy1Sell2,

If psychology was not a critical part of trading - and I would say it is hard to argue otherwise - I would agree with you : if backtesting shows that not scaling out produces the optimal net profit, there it is.


J.

Interesting that you should mention psychology, because that is another of the main reasons for not scaling out. Human behavior is repeated over and over and reflects itself in the technicals. Until the technicals say otherwise, you should stay in the whole trade.

 

[jem]

Scaling adjusts both reward and risk.
Most traders who rule out scaling are too binary to see the fact that risk is favorably adjusted.

 

[lescor]

Have you ever traded 10 positions at the same time, 3 minutes after the open, all manually? Hmmm.... ?

Scaling out is a valid way to manage risk, take advantage of statistical odds of certain price moves and capture price spikes you can't react to fast enough. It has nothing to do with being 'scared' or 'wildly over extended'.

You come across as closed-minded and generally clueless when you make blanket statements of certainty regarding the markets.

 

[Thunderdog]

Quote from Buy1Sell2:

Scaling out is inferior behavior.

In my opinion, it is only inferior if the trader knows where prices will turn. As a mere mortal, I accept my limitations and the compromise of exiting at more than one level. It is akin to walking in the dark in unfamiliar territory. Better to feel your way and move cautiously rather than run full speed into a wall while making great time. But that's just me. Of course, if I were a trading god, I would play it differently.

 

[JORGE]

Quote from Buy1Sell2:

Most times, I am able to pick the area. Not the tick, but the area.

You are a far better trader than me. Until I acquire the ability to pick the exact end of a move I will have to settle for the inferior practice of scaling out.

 

[cosmic]

good point lescor,

certainty

we project to much of our needs onto the market at times.

scaling out is a very valid way of trading, because if you get a below avg move, you still have have created a risk free or at worst a breakeven trade.

 

[fearless9]

Quote from lescor:


You come across as closed-minded and generally clueless when you make blanket statements of certainty regarding the markets.

I could not agree less with you.

IMHO, B1S1 is trying to draw out trader´s opinions and successfully so as he drew out yours.

 

[HoundDogOne]

Quote from Buy1Sell2:

Scaling out is inferior behavior. When we have a winner, it makes more sense to let it ride. Will that cause us to give back profits sometimes? Yes. However, it will keep you in the really big winners and more than offsets the savings by scaling out.

--The reason folks scale out is many times due to the fact that they took a larger position than they were comfortable with initially. In effect, they were wildly overextended. The scale out feature simply gets them back to where the total position is now of a more correct size for their account size and comfort level. In summary, they were scared when the original position was on and now have been lucky enough to get some profits and feel they can let the rest run. What happens though when the initial trade goes against? --Sometimes they let the whole trade run as losses mount. -No, it's better to size correctly and let it run to where you can exit at a time of your own choosing (borrowed line from George Bush). No sense being a weak hand.

Why do people post simplistic "truths"?

When I "scale out" and take a profit...
The money goes right back to work in another position.

While someone sits on a position for a week and MAY take a slightly bigger profit...
I will have scalped in and out 10 times and made more money.

And here is the BIG point:

If you scalp in and out aggressively...
Your RISK IS MUCH LOWER than holding medium term positions.

There are reasons all the smartest Big Players...
Are all building algorithmic scalping Bots as fast as they can.

Buy and Hold is sub-optimal in today's decimal, near-zero transaction cost markets.

 

[Buy1Sell2]

Is this the extent of what you can throw at me?? Simplistic? , Clueless?, Closed Minded? Come on folks, my portfolio is growing as I type with minimal trade activity and very little energy expended. If that is simplistic, then I accept the description.

 

[Buy1Sell2]

Quote from lescor:

Have you ever traded 10 positions at the same time, 3 minutes after the open, all manually? Hmmm.... ?

No. I am a position trader who occasionally puts on a swing trade. I view daytrading and trading at the open as inferior behavior as well.