Quote from Buy1Sell2:
Mark , in your example , you let the first trade run to it's maturity. Then you put on a second trade with new info and parameters. That is not scaling out. I assume then that you let the second trade run to it's maturity as well? I have no problem with a second trade being put on and run to maturity as long as the first trade is also allowed to run to it's maturity. What I do have issue with is when somone backtests and decides that a 5 pt stop loss and a 15 point profit target hits 60 percent of the time, so that is what they are going to trade, and then pulls the plug at 13 or 14 points. 
I didn't say I ADD via putting on a second trade.
I said if market conditions
change after my entry and gives me new info...
I'll dump a portion of my position at the original profit target as if the market has not changed and keep some remainders to exploit the new market info.
This is scaling out and I've backtested such for my trading style.
I'm much more profitable via this type of scaling out and that reason alone is a
good reason to continue doing such when it merits for such.
However, sometimes in the same situation...
I do ADD to the position.
This is not scaling out.
Yep, the times when I ADD to an Open position...I try to let it run to its maturity (profit target).
However, in your example...
...5 pt stop loss and a 15 point profit target hits 60 percent of the time, so that is what they are going to trade, and then pulls the plug at 13 or 14 points...
I agree with you because I see problems with that type of scaling out via what I understand what your trying to suggest about situations like that.
With that said, I see two different types of Scaling Out situations.
* One is planned prior to entry.
* One is not planned prior to entry and occurs as a result of being
scared out of the trade for what ever reasons.
I think some in this thread are talking about one particular situation while others are talking about the other particular situation.
My point, you can't really call it an
inferior trading style until you know the reason for scaling out.
For example, lets say you get a Long signal in ES at 1438.00 and you have a profit target at anything above 1450.00
However, lets say you get another trade signal to go Short after price hit 1447.00
Reality is this, had you not been Long, you would be opening a Short position around 1447.00
Now you need to convince yourself why you would
ignore your Short signal and keep your Long position in hope of riding it to its maturity???
* Do you dump it all because you don't want to ignore your strategy signals?
* Do you scale out most of the position and keep some to see if it reaches its maturity???
* Do you reverse your Long position into a Short position even though you didn't let the Long attempt the 1450.00 price level???
My point, there are different reasons why to scale out and different reasons why not to scale out.
Backtest as many of these
different situations to see which is more suitable/profitable even though it may not be sutiable/profitable for someone else that's using a different strategy and/or different trading style.
Simply, learn when to exploit both and you'll be a better trader because there will be market conditions where one is superior than the other and vice versa.
Mark
