"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
Do you really consider FSLR or GS or AAPL illiquid stocks? These are all the daytraders' favorites.
Lemme put it in terms as abrasive as b1s2: EVERYONE who is a successful intraday equities trader, week in, week out, scales in and out of positions. You CANNOT be a successful (say 6-figures monthly successful) intraday equities trade without knowing when you have to scale in and out of a trade. Period.
Honestly, I have no clue what you are talking about, of course there is a way, since you keep bringing up intraday stock trading I can reply by saying try not keeping all your eggs in 1 basket, that way you would not need to justify scaling as an equal/superior way in relation to all in/out. He is talking about a simple math equation, which is indisputable. All you are trying to say is - Hang on, I can't use all in/out daytrading AAPL because basically I would be screwed on fills as I trade size. That is a justification to why you can't trade without having to scale in/out, not that there isn't a way to achieve it though.
There is a difference between insulting someone and setting forth a proposition.
Note that B1S2 did not say that a person was inferior, but that the approach that a person may use was inferior.
If someone could point out in this thread where B1S2's math was flawed, or his assumptions unwarranted, I would be appreciative; but I understand if no one would for lack of time.
Interesting how the discussion on this thread has diverged from the original disagreement with the premise (e.g. scaling out is a better trading strategy) to this new pragmatic notion that you have to scale out to avoid bad fills.
I really don't see how one has to do with the other.
Lets say you want to sell your mega-holdings when the price hits 100, but you can't dump it all at once because you are worried about slippage. So you you sell your shares into the market in blocks, you don't dump it all at once.
What does that have to do with the core issue of selling everything at a certain price (100) vs. selling half at 100 and holding on to the remaining until you hit a different price target (say 102)?
Those are two totally different concepts. Scaling out to avoid slippage isnt scaling out - its just basic order management.
I really don't see how one has to do with the other.
Lets say you want to sell your mega-holdings when the price hits 100, but you can't dump it all at once because you are worried about slippage. So you you sell your shares into the market in blocks, you don't dump it all at once.
What does that have to do with the core issue of selling everything at a certain price (100) vs. selling half at 100 and holding on to the remaining until you hit a different price target (say 102)?
Those are two totally different concepts. Scaling out to avoid slippage isnt scaling out - its just basic order management.
Apples and oranges. 20 (10 w + 10l) trades versus 38 (18w+ 18l+ 2 l) trades.
Still wrong. Are there sub-par "systems" that would fall under b1s2's criteria? Of course there are. But sub-par is the key word here. Let's end this line of discussion here.
EDIT: It's really silly when you think of it, spending time on a forum trying to push one way of thinking over another, when all it can do, if anything at all, is hurt your own results.
I change my mind: b1s2 is right, you should always enter and exit at market, that is the only true way to trade. Good luck gentlemen, I hope to see the wake of your profitable prints on the battlefield!
Unfortunately for you, you did, when pushed into a corner, claim that you knew the optimal exit point for every trade before it appeared. This is what ended my participation in the thread. Once I read that, I realized that your refusal to admit that there exist trading strategies which correctly employ scaling out represents a faith-based belief on your part, since when confronted with evidence which tended to refute your position, you did not do what a scientist would do (assimilate the new information and adjust his hypothesis). You just blindly stuck to your position and then made the unfortunate statement about knowing the optimal exit point for every trade before it occurred.
Everyone who has been following this since the beginning knows this is true. I am not going to wade through hundreds of posts to cite the relevant week. It is a part of the permanent record of this site. You said it (repeatedly) and it is in the archives.
I notice you were unable to answer to one of ten good points made here, namely the fact that scaling out is a must if you are managing very large positions. Any other strategy is sub-optimal and will result in less profit. This is a fact which, for all your smileys, you will not be able to deny.
You are missing the whole point.I chose a breakout system and a reversal system to be thorough in ones testing.It is not a comparison of one vs the other.
Had you done a thorough testing of your "discovery",you would see that reversal sytsems do have much different characteristics than breakout systems..
It is very clear that your basis of analysis is an eyeballing technique,and more power to you if that should happen to work.But in no way is that supplying the math,and your claims are misleading as well as not true.
Scaling out does not work for you and that is not up for debate.To say scaling out is inferior behavior is truly an absurd statement,especially with what you present....
Substantiate your claims with some sort of valid backtest/simulation.That does not seem to be an unreasonable request,assuming you have actually done the work...
Had you done a thorough testing of your "discovery",you would see that reversal sytsems do have much different characteristics than breakout systems..
It is very clear that your basis of analysis is an eyeballing technique,and more power to you if that should happen to work.But in no way is that supplying the math,and your claims are misleading as well as not true.
Scaling out does not work for you and that is not up for debate.To say scaling out is inferior behavior is truly an absurd statement,especially with what you present....
Substantiate your claims with some sort of valid backtest/simulation.That does not seem to be an unreasonable request,assuming you have actually done the work...
Quote from Buy1Sell2:
Tao, here's the rub. This is not about comparing systems ie trend versus reversal. It has nothing to do with that whatsoever. It has to do with trades inside of the same system. I have already posted the math for that. It's a very simple and accurate premise/equation. Thanks for the post!