"Scaling out" is inferior behavior

[Buy1Sell2]

Quick reminder here:

If you do use Scaling Out, do not kick yourself too hard. The fact that you have put an Exit Strategy into place means you are ahead of the vast majority of your peers, unbelievably less than 20% of traders actually have an Exit Strategy they adhere to!

--Ishmael

 

[FanOfFridays]

Hi B1S2

Since you appear to be around tonight, can you tell us about the possible correlation between your opinion that daytrading is 'inferior behaviour' (as you call it) and the fact that you failed at it when you tried, as revealed by the posts you made in the 'Epiphany' thread?

Did you decide that it was 'inferior behaviour' after you failed at it?

This will give us some insight into the other things that you call 'inferior behaviour', like scaling out.

Thanks

Also, can you confirm your earlier claim in this thread, that is, that you can determine the duration of a future market move by backtesting that market? We would like a very clear statement of that for the record.

 

[Buy1Sell2]

"One common adage on this subject that is completely wrongheaded is: you can't go broke taking profits. That's precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance." - William Eckhardt


Very good point--Ishmael

 

[FanOfFridays]

Thanks, that's great but can you answer the questions?

I feel it's important, inasmuch as we can develop a baseline against which we can evaluate your statement that this or that is 'inferior'. You said that daytrading is inferior, just like you said that scaling out is inferior.

You failed at daytrading, and then you decided it was inferior. Is that correct?

 

[joemiami]

I have one question for Buy1Sell2....

Have you ever posted "real trade" performance figures for whatever it is that you trade or you just like to act like you trade for real?... I, like other ppl on here, think its the latter.

Anyone who needs to "bark" whats the wrong and whats right way to trade is obviously NOT in the game for real...

Ive noticed that for quite a while on here....most(not all) ppl that post on here are wannabees/fakes.

 

[Buy1Sell2]

Here is a post from 2007 where I describe the purpose of my demonstration of failed daytrading. ( I am in fact, an excellent daytrader when I choose to daytrade which is very very rarely).Everything I do on ET is designed to demonstrate and help people relate to their own experiences.




(From 2007)
--------The earlier pages of this journal were designed to show the futility of the daytrader attempting to trade both sides of the market and flailing around. I was successful doing so, but it was only through a series of position add ons after stop outs and then I was finally right and reaped the benefits. Most folks do not have the fortitude to do that. It's best to trade from only one side. Hopefully the earlier journal pages have not gone lost on everyone. -------

 

[volente_00]

Quote from Cutten:

Wrong. On the same size, it will result in lower returns but result in even lower drawdowns/volatility relative to those returns, thus giving a superior return to risk ratio. One can therefore trade bigger size from the outset, equalizing the risk with the "all or nothing" strategy, yet generating higher returns. Or keep risk bit lower and returns the same. Either is clearly superior to the all in all out system.

 

[volente_00]

Quote from Buy1Sell2:

"One common adage on this subject that is completely wrongheaded is: you can't go broke taking profits. That's precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance." - William Eckhardt


Very good point--Ishmael

Actually it is a bad point. The more losing trades you have from a % standpoint, the lower your self confidence will become. This will lead to trader's block as well as to closing out winning trades with small profits because of fear. Scaling out smoothes your equity curve while reducing risk. The most difficult part of trading is the exit. Anytime you take an action that prevents a trade from eating into your initial bankroll, you will be gain confidence and will be more inclined to let the remainder run longer knowing you will no longer be able to lose on the trade. The larger your target is, the more profitable it will be to scale out due to probability. This especially holds true for day trading.
You have posted many trades in your es journal that have sometimes went back against your profit 30, 40, 50, 100+ points before you exited. Had you been scaling out, you would have enjoyed much more profit on them.

 

[Buy1Sell2]

Quote from volente_00:


You have posted many trades in your es journal that have sometimes went back against your profit 30, 40, 50, 100+ points before you exited. Had you been scaling out, you would have enjoyed much more profit on them.

and on the trades that went farther in my direction, I made much more money. That money more than offsets the money missed on the trades that you would have encouraged scaling. The point has already been proven by myself and others. We are now discussing the number of decisions a trader has to make when scaling and also the concept of reverse position sizing. --Ishmael

 

[FanOfFridays]

Quote from Buy1Sell2:

Here is a post from 2007 where I describe the purpose of my demonstration of failed daytrading. ( I am in fact, an excellent daytrader)

It's best to trade from only one side.

So let's get this straight.

1. You believe that a strat used by the majority of traders including the biggest funds in the world is 'sub-optimal'.

2. You believe that daytrading is 'inferior'.

3. Now, to add to the list, you are telling us that you believe traders should trade from one side only??? That is to say, traders should not be equally willing to go short or long?

Can you just give me a quick confirmation that this is accurate? I ask because it would seem impossible that anyone with any common sense would hold such views.