"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
Quote from Buy1Sell2:
I'm not basing my argument on that. You asked a question and I answered it.
he's saying going all-in is less risky than breaking up your trades at different price levels, but his math doesn't confirm the theory.
end of discussion.
Quote from Buy1Sell2:
I'm not basing my entire argument on that. You asked a question and I answered it.
I never asked a question, I was just pointing out the flaw in your assumptions.
Quote from HispaTrader:
I never asked a question, I was just pointing out the flaw in your assumptions.
It may not have been posed with a question mark, but the statement was tantamount to a question. Seriously though, do the exercise and let me know what winning percentage the 4.5 target needs to have to make scaling out more profitable.
There's no flaw by the way. It certainly is possible that they could have the same winning percentage, especially on a little large time frames. (It's really not relevant to the discussion we are having here.)
Quote from Buy1Sell2:
Four ES Contracts 50% win ratio all in/all out versus
Four ES Contracts 50% win ratio scaling out at half target.
9 pt target 3 pt initial stop loss
1st example with 20 trades
10 winners for 9 X (4 conracts) = 360 pts ($18000)
10 losers for 3 X (4 contracts) = 120 pts (-$6000)
Net profit $12000
2nd example with 20 trades
10 winners for 9 X(2 Contracts)=180 pts ($9000)
10 winners for 4.5 X(2 Contracts)=90 pts ($4500)
10 Losers for 3 X(4 Contracts) =120 pts (-$6000)
Net profit $7500
Money can be made scaling out, but it represents inferior behavior--Ishmael
Your numbers are flawed because backtesting will show that ES moves in smaller ranges more often than it moves in larger. Therefore the trader who scales out some will have a higer win rate and is more profitable and at the same time will be able to participate in many more winning trades than the one who is stuck waiting for the larger winner to materialize. From my own personal experience, scaling out increased my win rate by an additional 20 - 25 % as it allowed me to make additional profit on trades that would have otherwise been losers.
Probably 30 different traders have pointed out the flaws in the OP's assumptions, and his poll shows that the large majority disagree with him, but that doesn't stop him from continuing his assertions.Quote from HispaTrader:
I never asked a question, I was just pointing out the flaw in your assumptions.
It's interesting - every time someone points out this or that flaw, his response is always the same. It goes something like this
"Scaling out is inferior behaviour
"Apparently he thinks smileys constitute proof.
The recent claim that the duration of a market move can be determined before the trade is placed by... wait for it... by backtesting is the most bizarre thing we've heard so far. The OP made that statement and then immediately tried to distance himself from it. And with good reason.
second that.
=o]
=o]
No sir. I have shown that even the trader using the losing system with a small 1 pt target loses less when he doesn't scale out. I have proven beyond any doubt that all in/all out over the long haul is superior to scaling. Now it's just a matter of time before the naysayers realize it too. It doesn't matter to me if everyone agrees, I am simply passing on information that I know to be true regardless of whether profit targets are used or trailing stops etc are used. I know this from the math and also from my own extensive personal trading experience. --Good trading to all--Ishmael
Backtest this buy1
How many times a month does the es move in a 100 point range ?
How many times a month does it move in a 10 point range ?
We can even use your flawed assumption that both traders hit only 50% winners.
Who has more trading opportunities to capture more total profit for the month ?
The smaller your target and stop is, the more profitable it becomes to scale out to prevent winners from turning into losers and by doing this your winning % rises above those who don't scale out.
How many times a month does the es move in a 100 point range ?
How many times a month does it move in a 10 point range ?
We can even use your flawed assumption that both traders hit only 50% winners.
Who has more trading opportunities to capture more total profit for the month ?
The smaller your target and stop is, the more profitable it becomes to scale out to prevent winners from turning into losers and by doing this your winning % rises above those who don't scale out.
the percentage of winners v. losers varies greatly from the median of 50%. to assume it's always an even bet is inferior behaviour.