"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
But you've got to give him Obsession Points for carrying on this argument so so long.
Pure opinion/assertion based on a false premise - that is, that the extent of a move can be determined before a trade is put on. It is obvious to anyone who has actually traded the markets that it's impossible to know beforehand what the markets will do. It is also a mathematical fact that if a trader is always on the right side of the markets, he will make more money than a trader who is sometimes on the wrong side of the markets. The premise of this thread is about as useful as that.
B1S2 was forced to claim that this knowledge of the future was the basis for his assertion. I am not going to search back through the thread to cite the post.
There are plenty of systems that rely on scaling out in order to achieve their performance targets. These systems are used by the biggest trading companies on the planet. Trading in and out of a position is a common technique. To suggest that it is somehow 'wrong' is to suggest that it is possible to make the optimal decision in every single situation. Trading is all about understanding that this is impossible, and developing the discipline/technique to implement decisions which mechanically protect capital when the trader is wrong, and ensure profit when the outcome is in question.
It is my belief that unless you have been fortunate enough to devise a trading system with precise mathematical and quantifiable rules, you will always succumb to scaling out. When you scale out, it is because you have not found the proper rules to keep you in a trade or position. Certain events should occur before starting or ending a trade or position and until those rules or events are solidified, you will have to resort to scaling out which I agree is inferior behavior as well. But without a decisive rule set, it is all most have to rely on to achieve profits.
I agree, although I would not use the word 'succumb'. If you have not developed a system with those precise rules, scaling out is optimal behaviour.
It makes no sense to hold up an idealized model for trading behaviour and say 'If you don't do this, you are inferior'. This has no meaning other than to point out that there is a theoretically perfect way to act if one had advance knowledge of the future.