"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
I think it's very important to always counter the false information being disseminated in this thread - namely, that there is a 'one size fits all' way to trade and that 'backtesting' can somehow determine the 'optimal exit point' for a trade (a new assertion by the OP, one to which reference hasn't previously been made and one that is perhaps more outrageous and misinformed than the original assertion about scaling out). There are a lot of beginners who read through these threads and the thread title will probably attract them.Quote from Buy1Sell2:
Thunderdog, the recommendation for you is to exercise your option to not read the thread. The information provide by me in the thread is very viable and some may find it useful, so to get rid of the thread could be counterproductive. --Ishmael
Since this is a public site, the thread cannot be deleted, and nor should it be, since if a beginner reads through the first 100 or so posts, he can see for himself that the idea that there is an 'optimal exit point' for any trade has been proven to be false.
I think it's great that you have finally admitted that it is impossible to determine the optimal exit point for any trade! That's progress.Quote from Buy1Sell2:
This is fine and is largely the way I trade. I just make sure that I leave the entire position on, not a portion of it. Good for you if you are doing that as well! Thanks for the contribution---Ishmael
Now if you will admit that it is impossible to determine in advance the duration of any market move through what you call 'backtesting', we will have made a lot of progress in terms of making sure that beginners aren't getting mislead by the false premises in this thread!
I think it has been shown rather conclusively in this thread that it is impossible to know in advance the optimal exit point for a trade before the trade is entered.Quote from Buy1Sell2:
It is most certainly possible to discover the optimal exit point for trades.--Ishmael
Beginning traders should be warned against believing that either analysis of volatility and ATR or, most absurdly, backtesting, can give them a magic number which represents the duration of a move before the move has started.
For most people, it would be intuitively obvious that the future cannot be predicted in this way. Certainly those who trade real money know it.
It is mostly theoreticians and those who do not trade who make statements like 'Volatility can tell you how long prices will go up', or 'backtesting can tell you when to exit a trade'.
Although it is silly to suggest that the optimal exit point for a trade can be determined through 'backtesting', what is even sillier is the suggestion that there is a 'one size fits all' method that will work for any trader regardless of the type of system in use. My posts here aim to warn beginners that believing in these ideas can result in sub-optimal trading performance.
scaling is INFERIOR BEHAVIOUR to what, or whom? your strategy?
i disagree. and if giving back profits is part of YOUR strategy of "letting it ride" like some gambling junkie at the track, then you are...
WRONG.
scaling in and out of one stock in mulitple positions allows you to offset and increase profitability in intraday trading as you monitor a stocks real time movement plus and minus.
if i buy 1000 shares at x and sell half at y, keep the other half until they hit z, then i'm either losing money on the second half or making more than the first. either way, i'm also reducing my risk level by half, and giving myself the possibility of increasing my profitability overall in that stock for the day, or reducing my loss on the original position having not sold out the entire lot at once.
it allows multiple trades within one stock strategy and offsets and enables you to take advantage of volatility without blowing your account out of the water when the risk management system liquidates you on a margin call.
but that's just my .05, divided into pennies, traded in blocks of 2.
rb.
What this indicates is that you have not read the thread at all. Sorry, but there has been no evidence presented yet, that disproves what I say. What does happen is that people go off topic and try to change the discussion. --Ishmael
By the way, it's this kind of emotionally driven response from people arguing against that also detracts from their ability to make money trading
Yes, leaving aside for a moment the ridiculous suggestion that the optimal exit point for a move can be determined through 'backtesting' (one of the strangest suggestions I have ever seen in 7 years at ET), the OP seems to believe that he knows what is best for every trader and trading system. Of course this is obviously wrong.
The only explanation is that the OP does not actually trade - he's probably a university student or someone with a mathematical bent who's interested in the markets. His statements in this thread are the exact type of thing we would expect to hear from someone for whom theory is more important than practice.