"Scaling out" is inferior behavior

[taowave]

Quote from Buy1Sell2:

I didn't used to think so, but now I do. You should always be in the market and the only time you would take your money off the table is when you think there is a reversal--otherwise why take any off?

Not sure what you mean by "take your money off the table when you think there is a reversal"...

That certainly is not "always be in the market"......

By your logic,if you feel one should take 100% of a position off at a specific target or signal,then unless you reverse your logic is inherently flawed,or should i say not optimal...

 

[Buy1Sell2]

Quote from version77:

When I was a kid my grandma always told me if someone comes
around passing out cookies to take some before they are all gone...

True, but she also said to grab with both hands, not just one.

 

[Buy1Sell2]

Quote from taowave:

Not sure what you mean by "take your money off the table when you think there is a reversal"...

That certainly is not "always be in the market"......

By your logic,if you feel one should take 100% of a position off at a specific target or signal,then unless you reverse your logic is inherently flawed,or should i say not optimal...

It was just a poor choice of words. By taking money off the table, I meant that you should take all profits off the table and reverse the position. You always should exit the full position.

 

[version77]

Quote from Buy1Sell2:

It was just a poor choice of words. By taking money off the table, I meant that you should take all profits off the table and reverse the position. You always should exit the full position.

It sounds like you are trading Jack Hershey's method or something similar.

 

[BlindLemonBoosh]

Quote from Buy1Sell2:

You have just stated that Mr Quant is not using targets therefore the answer is very simple since it is how I do the bulk of my trading. -- He stays in the trade until the previous reaction low stops him out.

Another erroneous assumption. He adjusts his trade sizing at regular intervals based upon the present expectancy of the position.

P.S. Q: "What should Mr. Quant do?" A: Scale out.

I won't go into any more detail. You seem too closely attached to your trading "world view" to assimilate new information. Good luck with your trading.

 

[Buy1Sell2]

Quote from BlindLemonBoosh:

Er, no. You should probably try reading the "Mr. Quant" post again. There is no such thing as a "target" in his trading methodology.

Here is the section where you indicated that he used no targets. This is what makes my response so simple . He stays fully in the trade until previous reaction lows are breached. That is the proper way to trade when not using targets period. I don't need any extra detail in this example. The level of positive expectancy is irrelevant to a trader who is not using targets. All they need to look at is if the the trade is positive at all and then enter the trade. Then they use trailing stops. What happens to derail most otherwise sound thinkers is that they try and make trading more complicated than it is. It is not--

 

[fearless9]

Quote from Buy1Sell2:

What happens to derail most otherwise sound thinkers is that they try and make trading more complicated than it is. It is not--

Very well put.

 

[BlindLemonBoosh]

Quote from Buy1Sell2:

I don't need any extra detail in this example.

Of course not. Your mind has been made up since the original post. Keep the blinders on - don't let any cognitive dissonance get in your way.

Quote from Buy1Sell2:

The level of positive expectancy is irrelevant to a trader who is not using targets.

Au contraire mon frere. It is quite relevant to the sizing of the trade - we're talking about a methodology that dynamically reappraises the risk/reward picture. An investor using such a tool would be trading irrationally if trade sizing weren't adjusted on a dynamic basis as well. An equivalent way of considering this trade is as a sequence of discrete trades, with optimized sizing - the old one being closed & a new one being initiated each time the forward expectancy is re-evaluated (weekly, daily, hourly...whatever). Perhaps this conceptualization will assault your sensibilities less than the term "scaling out".

 

[Buy1Sell2]

Quote from BlindLemonBoosh:




It is quite relevant to the sizing of the trade -

Position sizing is a function of where your stop will be on the chart. It has nothing to do with positive expectancy if you trade a system that does not use targets. Your trade is adjusted dynamically on the risk side by trailing stops. This is trading 101.

Anyway, it is irrelevant to this thread due to the fact that my assertion is what occurs AFTER you had made a decision on position sizing etc.

It is a simple math truth that you make more money over the long haul by not scaling out AFTER decisions have been made on position size, market direction etc. --It just isn't relevant here, but could be in another thread. The simnple fact is that when you take partial profits off the table before trade maturity, you may make money , but it will be a poorer performance than if you let the enire trade run to maturity.

We need to keep on topic here. Thanks

 

[Buy1Sell2]

Quote from BlindLemonBoosh:

Your mind has been made up since the original post.

Correct. --And a lot earlier than the original post I would add. I would also reiterate that since the beginning of the thread , I have changed my position on scaling in as well and now believe it to be folly over the long haul tool.