Just my two cents, but why dont you set different profit targets depending on where you are within the prevailing trend ...i.e if you are taking trades with the trend them profit target are wider and shorter targets if counter trend. knowing where you are in the trend will dictate your targets and that is a skill that takes time .
"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
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I just don't get it. There's hundreds of ways to scale out. Different ratios, different targets. What's the deal here. This subject should be over and done with.
You don't want to scale out that's fine. There's no problem there. But I just can't see how you have the discipline to hold onto winners and cut losses quickly.
When I trade I average up and scale out. It's that simple. I can see how "not scaling out" can be extremely profitable, but you have to be good in the head and you're gonna take on a lot of stress IMO.
You don't want to scale out that's fine. There's no problem there. But I just can't see how you have the discipline to hold onto winners and cut losses quickly.
When I trade I average up and scale out. It's that simple. I can see how "not scaling out" can be extremely profitable, but you have to be good in the head and you're gonna take on a lot of stress IMO.
because it varies.
the prevailing trend depends on your timeline. it could be in real time or 5m or 15m or 30m or an hour or a day or three days or whatever you set your trading range and targets.
that's why it's more profitable and less risky to scale in and out.
you can adjust your positions and overall strategy as conditions change in the stock and it's sector and the market as a whole.
and since no one can predict the future (other than some asshole traders who think they can) scaling is an intelligent way of adapting to volatility.
THREAD CLOSED
And consistent exit signals as well. Thus, over the long haul, it makes more sense to go all in, all out rather than scale in/out. Certainly, on an individual trade, someone could say, "Look, I made more money because I took half profit before it fell back--". Of course, the real problem there is that had they taken the whole position off, they would have made more money than letting half fall back. Then, you have the individual who says "Look, I made more money because I took half off and let the other half run. --" Sorry, you still have the same problem. You could have left the whole position on for the full run and made more money.
THREAD REOPENED.
i disagree.
shaddup shutting up.
OR, you could reinvest your profits on the half knowing it would rebound off a short-term pullback, and make even more the second time around, EITHER by going ALL-IN again, or just a partial reinvestment, BECAUSE most likely you have reinvested that freed-up capital into other positions.
OR, if you were wrong and all-in, you would not be so happy to go all-out and lose everything, when you could have scaled out and reallocated in another position to make up for that initial stupid mistake of thinking putting all your eggs in one basket and dropping the basket half those eggs might break.
methinks they call that risk management, i.e. diversification.
Absolutely correct. If you know in advance the duration of a move.
However, since it is impossible to determine in advance the optimal exit point (since this would involve predicting the future, something that is not possible) scaling out will often be the most effective strategy.
Again, of all the errors in thinking and theoretical assertions in this thread (backtesting can tell you when a move will end!! An amazingly naive assertion), the strangest is the idea that there is a one-size-fits-all method of trading. Of course different systems will require different methodologies.
Some folks want to get tied up with the notion of optimal exit point and whether or not it can be determined. The real discussion from the beginning is not as much that as it is just to let your trade run fully to maturity. With that in mind, to make it more understandable for the masses, just think of it as the optimal exit point for each individual's taste and stop trying to change the discussion into one of "market" optimal exit target. You'll quickly see that a person using their own individual optimal target of 6 points will do better by letting their full trade run to 6 points each time. The person using a target of 15 points will do better by letting the trade run 15 points each time. Also, even the lowly trader using a 10 point stop and a half point target will do better by letting the trade run fully to the half point each time instead of taking some off at a quarter point. --Just get past the knee jerk emotional reaction to the premise and you will see that the math doesn't lie--even for the person not able to identify "market" optimal targets. --Good trading to all --Ishmael