"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
We are well aware that you would exit all at once - you have told us that plenty of times, and there is no value in repeating it. What we want to know is *why* you would exit fully, when retaining a moderate position would still prove profitable? Why exactly do you want to give up a profitable position, and prefer to park cash in t-bills?
But instead of giving us an honest answer, you've repeatedly tried to evade the question. First you said it was "obvious common sense" to exit wholly. When countered with reasons why it might be common sense, and profitable, to maintain a smaller position, you tell us you have a plane to test.
These are classic responses of an evasive politician who doesn't have anything to justify himself, but just wishes to avoid being put on the spot or caught out. Admit it - you don't actually have any logical reason for your belief, and when this is clearly pointed out to you, you go into denial mode and try to change the subject.
Such a mentality is not typically successful in the markets. In addition, the successful traders I have encountered generally do not make a big point of bragging about their profits & lifestyle when debating trading tactics, and certainly don't use it as an attempt to avoid being cornered in a debate. You are not only illogical and evasive (two terrible traits for trading), but you actually practise the very scaling behaviour which you profess to condemn.
I call BS. I would be highly surprised if you were in fact a profitable trader. I think it's much more likely that you are a fake and a liar.
Cutten, you need to calm down 
B1's method of 'all out' is not suitable to a lot of traders for various reasons especially intraday based, one of them is a trader's ability to find a good entry point, though uncertainty about where to exit, therefore a scale out is being used, partial closure warrants locked profits with exit at entry, etc. B1 is simply saying that a strategy that halves a potential profit though keeps a loss at 100% position size is a flawed "inferior" way to trade. I both agree and disagree with his statement. it's certainly is not an easy debate as all discussions have to be relative to a specific situation, not to multiple/different methodologies. What B1 does, he does very well, intraday high leveraged position trades would be very difficult to achieve using 'all out' method, unless profit target is relatively tight and/or trailing stop used. IMHO.
B1's method of 'all out' is not suitable to a lot of traders for various reasons especially intraday based, one of them is a trader's ability to find a good entry point, though uncertainty about where to exit, therefore a scale out is being used, partial closure warrants locked profits with exit at entry, etc. B1 is simply saying that a strategy that halves a potential profit though keeps a loss at 100% position size is a flawed "inferior" way to trade. I both agree and disagree with his statement. it's certainly is not an easy debate as all discussions have to be relative to a specific situation, not to multiple/different methodologies. What B1 does, he does very well, intraday high leveraged position trades would be very difficult to achieve using 'all out' method, unless profit target is relatively tight and/or trailing stop used. IMHO.Actually, I think that B1S2 wants you to stop reading his posts all at once. Any other decision would clearly be inferior.Quote from fhl:
I'm going to scale out of my reading of this thread, and only read the posters who have usefull things to say.
Since b1s2 advocates trading the longer term, risking 2% on any given trade idea -- it's really no wonder that he doesn't condone scaling, there's basically no room for it. When trading such long time frames, you will need to have stops that are quite wide, and to limit your losses to 2% it means your position size relative to your account size will be much smaller than a shorter-term trader. To let go of a good trade even partially prematurely is very costly in this scenario.
What he is missing here in his personal disdain for short-term trading is that one can take much larger positions with tigher stops on the shorter time frame; for every 1 contract b1s2 takes, the shorter-term trader given the same size account will probably be comfortable with 5. What we've been trying to convince him of is that if both traders decide to take positions at the same time in the same direction, the shorter-term trader always has the option of holding for a longer term position, by scaling out of his "short-term" size, and reducing into a position size more commensurate for a longer term trade -- thus, in this case, "scaling out" helps keep him in the position longer, and it's a "given" who makes more money here.
It might just be a matter of perspective for when scaling is appropriate, but compared to the longer-term trader who cannot handle the shorter-term as well and must stick to that smaller position size to maintain his 2% loss limit -- well, it's quite obvious what is actually the inferior case here. So consider yourself right for your own trading purposes, but if you're going to use the label "inferior" on anything, you might want to start with your own forehead.
What he is missing here in his personal disdain for short-term trading is that one can take much larger positions with tigher stops on the shorter time frame; for every 1 contract b1s2 takes, the shorter-term trader given the same size account will probably be comfortable with 5. What we've been trying to convince him of is that if both traders decide to take positions at the same time in the same direction, the shorter-term trader always has the option of holding for a longer term position, by scaling out of his "short-term" size, and reducing into a position size more commensurate for a longer term trade -- thus, in this case, "scaling out" helps keep him in the position longer, and it's a "given" who makes more money here.
It might just be a matter of perspective for when scaling is appropriate, but compared to the longer-term trader who cannot handle the shorter-term as well and must stick to that smaller position size to maintain his 2% loss limit -- well, it's quite obvious what is actually the inferior case here. So consider yourself right for your own trading purposes, but if you're going to use the label "inferior" on anything, you might want to start with your own forehead.
Dogma is dogma, regardless of it source or presumed quality.