"Scaling out" is inferior behavior

[NihabaAshi]

Quote from smilingsynic:

Do those here who suggest scaling-out winners also scale out LOSERS (in other words, start dumping before the stop loss is reached)?

I haven't seen any body in this thread that suggest scaling out of a losing position.

However, I haven't read the entire thread.

Also, I believe it was the thread starter or someone that posted a link to an online article that suggested that most traders that do scale out are also scaling out of losers.

Article doesn't represent what actually happens in real trading situations.

For example, most traders that I've met that do scale out...

If their initial stop protection is hit or they don't like the price action for what ever reasons...

They exit all at once especially if it involves a stop being hit.

With that said, there's myth being generated in this thread about FEAR.

In real trading conditions, a trader that scales out usually start doing such AFTER a profit target has been reached and then will try to capture more profits on the scale out.

That's GREED...not fear.

The myth is that the above tends to occur for most traders that scale out PRIOR to profit targets being reach.

Sure, it can happen and when it does...

That's FEAR...not greed.

In contrast, a trader that exits all out at once when the profit target is reached is more often than not doing such out of FEAR because in real trading conditions most traders I've met that exit all at once are using a sell order to be executed automatically when the price target is hit.

Yes, there are some traders that use market orders to exit all at once but its for the same principle...to protect profits.

That's FEAR.

The above I've described how profitable traders tend to trade in real trading conditions.

What about losing traders?

Losing traders either don't reach profit targets or they were profitable and let a winning position become a losing position simply because GREED (they wanted that target even though the market had other plans).

Anyways, all out at once makes a lot of sense on paper in comparison to scaling out.

In real trading situations, there are times when all out at once has more merits than scaling out.

However, there's other trading situations as mentioned recently in this thread that there's more merits to scaling out than all out at once.

As for those that are trading without a profit target or without a trading plan...

Scaling out nor all at once will have merits.

Like I said, both (scale vs all) has strengths and weakness...

There are many variables that determine when one has more merits than the other. (e.g. trading instrument, position size, volatility, slippage et cetera).

Yet, if you guys/gals are talking about a few contracts and it some of the types of price action where all at once has more merits...

All out at once is the way to go.

Mark

 

[Buy1Sell2]

Quote from NihabaAshi:



In real trading conditions, a trader that scales out usually start doing such AFTER a profit target has been reached and then will try to capture more profits on the scale out.

This is exactly backwards of reality. In real trading conditions, a trader that scales out usually starts doing so BEFORE a profit target has been reached and then will pull the rest of the contracts BEFORE the profit target is reached. That is fear.

 

[Thunderdog]

Quote from Buy1Sell2:

This is exactly backwards of reality. In real trading conditions, a trader that scales out usually starts doing so BEFORE a profit target has been reached and then will pull the rest of the contracts BEFORE the profit target is reached. That is fear.

How exceptional you are, to know all the right answers with such certitude in an environment of uncertainty, and to be able to second-guess everyone else as well. We must all seem like bungling, confused children to someone of your stature.

 

[Buy1Sell2]

Quote from NihabaAshi:


In contrast, a trader that exits all out at once when the profit target is reached is more often than not doing such out of FEAR because in real trading conditions most traders I've met that exit all at once are using a sell order to be executed automatically when the price target is hit.

False. --Again this is exactly backwards of reality. The trader exiting all at once is displaying confidence not fear. The trader exiting all at once has done their due diligence and realizes the simple math of this premise. They have traded taking smaller profits over the years and have come to the correct conclusion that scaling out requires more trades and a lot more work than the more profitable way of not scaling. They are confident in their position size and risk level. Very simple, but accurate stuff here.

 

[Buy1Sell2]

Quote from Thunderdog:

How exceptional you are, to know all the right answers with such certitude in an environment of uncertainty, and to be able to second-guess everyone else as well. We must all seem like bungling, confused children to someone of your stature.

I am not exceptional. I do not know all the right answers. I do not think everyone are bungling confused children

 

[Buy1Sell2]

Quote from NihabaAshi:


All out at once is the way to go.

Mark

I agree.

 

[Thunderdog]

Quote from Buy1Sell2:

...The trader exiting all at once has done their due diligence and realizes the simple math of this premise...

The simple math of predicting the future? Why else would someone go all or nothing unless he had been blessed with perfect foresight? Sorry, hombre, but you are starting to sound a bit like a cartoon character.

 

[Buy1Sell2]

Quote from Thunderdog:

The simple math of predicting the future? Why else would someone go all or nothing unless he had been blessed with foresight? Sorry, hombre, but you are starting to sound a bit like a cartoon character.

No one is predicting the future. They are simply using probabilities and tried and true signals to enter and exit. Where the rubber meets the road is in risk management. Yoiu use your full position each time and control the risk by getting out of the full position if it exceeds the max stop loss. For me it is 2 percdent of Total Liquid Net Worth. I'm not reinventing the wheel here.

 

[Thunderdog]

Quote from Buy1Sell2:

No one is predicting the future. They are simply using probabilities and tried and true signals to enter and exit. Where the rubber meets the road is in risk management. Yoiu use your full position each time and control the risk by getting out of the full position if it exceeds the max stop loss. For me it is 2 percdent of Total Liquid Net Worth. I'm not reinventing the wheel here.

Very well. After holding court for so long in this thread, would you care to share some performance statistics? You know, the "rubber meets the road" part.

 

[fearless9]

Quote from Buy1Sell2:

False. --Again this is exactly backwards of reality. The trader exiting all at once is displaying confidence not fear. The trader exiting all at once has done their due diligence and realizes the simple math of this premise. They have traded taking smaller profits over the years and have come to the correct conclusion that scaling out requires more trades and a lot more work than the more profitable way of not scaling. They are confident in their position size and risk level. Very simple, but accurate stuff here.

B1S2

I am not disputing the principal that you are endeavouring to highlight, but I strongly disagree with the dogma that one size fits all.

For example, let us assume that a Trader has accumulated a large position on a good run up the market.
The total position exceeds any normal tic size for that instrument and he wants to clear.

How is he going to achieve this if he doesnt spread the load over several tics.

regards
f9