I brought up the daytrading to make a point, in that sometimes choices are made for psychological benefit, which in turn leads to overall bottom line benefit. Perhaps, given the variability of relative volatility on an intraday time frame in the markets I trade, scaling allows me to make better judgements on my next trade, or helps to prevent me from chasing moves that I've already missed. You might counter that these are just mental "deficiencies" that don't warrant a reduction in profit potential -- which would also be my counter to your reason for not daytrading, in that trying to catch intraday fluctuations clouds the judgement of the bigger picture. Same reasoning really.
"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
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I brought up the daytrading to make a point, in that sometimes choices are made for psychological benefit, which in turn leads to overall bottom line benefit. Perhaps, given the variability of relative volatility on an intraday time frame in the markets I trade, scaling allows me to make better judgements on my next trade, or helps to prevent me from chasing moves that I've already missed. You might counter that these are just mental "deficiencies" that don't warrant a reduction in profit potential -- which would also be my counter to your reason for not daytrading, in that trying to catch intraday fluctuations clouds the judgement of the bigger picture. Same reasoning really.
That is part of it, yes.
It can appear to be slow and boring (especially on a day like today), but it once again makes sense, and you [the trader] will find yourself being carried to greater profits by professional organizations and institutions with a lot more dough, a lot more information and a lot more clout.
Regards,
JJ
Dunno about that one, they say the most vicious short-term spikes occur in bear markets, and vice versa for bull markets. It just might be the opposite that is true. For intraday time-frame, choosing setups with maximum velocity/minimal duration takes precedence over total ticks -- jmo.
Wrong. Or else you don't understand the definition of optimal. In my past corporate career I worked on some of the largest optimization problems that existed. Reaching an optimal solution is theoretically possible but rarely achieved in the real world. A computer can crunch numbers for hours as it iterates towards the optimal solution. Typically, near optimal solutions can be achieved in much shorter periods of computer time by using some tolerance that when reached causes the iterative process to terminate and the sub-optimal solution is deemed as "optimal". Bottom line is you, as a human, cannot know (or find) the optimal solution to any trade as there are too many variables in the solution space to model.
Another deficiency in your thinking is that if your trade doesn't hit your "supposed" optimal exit then you risk taking a loss, or having to choose to redefine your exit point, resulting is smaller profits than you initially set. Scaling in/out can exceed such results in many cases.
First, let me say that I when mentioned that I was making money in my portfolio as I typed, I was initiating some levity and mild prodding. It was meant harmlessly as humor. Now to the above point. I was open minded during the time I was learning to trade in the eighties. For the most part, I am now extremely closed minded in my trading approach. I know what works and what doesn't. Trading is not rocket science and there is nothing tremendously new in trading ever except the technology is more advanced ie electronic exchanges etc. The reason I can be closed minded about trading is that trading is simply human behavior which is reflected in technicals and it repeats over and over and over. Human behavior/nature never changes and so I need not change my approach ever. With regard to your scaling out, you would be more successful without it by defining where to exit the entire position. Good trading you!
What a number of people here don't understand is that they can't exit with the optimal profit, other than through chance and only very rarely. Thus, your sub-optimal exits may in fact be (near) "optimal" and it's something I gear my trading towards.
Anyone who's ever done any work in Optimization, such as linear programming, mixed-interger and/or goal programming, would likely understand why optimality is all but impossible to achieve in the real world.
Also, the number of variables involved in trading makes the optimal solution even more elusive.
I am clearly spending too much time in the P & R threads, where guys are constantly thumping their own chests, and serious about it. It is for me to apologize, for not seeing the joke.
For me?
I am not smart enough to define the optimal exit point before I place a trade. In my method, I need to observe price action after the trade is on and then determine the optimal course (add, remain flat or reduce, all decisions underpinned by total exposure and correlation rules). This is how I trade. I am not even smart enough to determine the optimal exit point after I enter a trade, especially if the trade is going my way, although good old S & R seems to work pretty well for this.
With regard to your not needing to change your approach, ever... wow, I wish I could say that I was in the same position.
I wish you the best