"Scaling out" is inferior behavior

Do you scale out of positions?

  • I always scale out

    Votes: 113 14.1%

  • I scale out most of the time

    Votes: 228 28.5%

  • Most of the time, I do not scale out

    Votes: 189 23.6%

  • I never scale out

    Votes: 270 33.8%
  • Total voters
    800
The most interesting feature of this thread is that the OP has provided nothing that resembles any sort of proof for his mistaken assertions. We have continually asked for anything, some sort of objective proof that scaling out is always sub-optimal. Typically we get posts like the one above

"No no no, I am right and you are wrong. This is the reason that scaling out is sub-optimal".

Please recall that the OP maintains the following beliefs

1. Daytrading is inferior behaviour.

2. Trading from both sides (i.e. long and short) is inferior behaviour.

3. The extent of a market move can be determined in advance. How? Get ready for it - through backtesting!! (This is perhaps the most bizarre claim being made by the OP). The OP calls this 'the proper place to exit' as if the number automatically pops up on the chart. Of course it is impossible to determine in advance 'the proper place to exit'.

4. Scaling in is also inferior behaviour

The OP has recently revealed that he has a fundamental misunderstanding of VAR (value at risk). The OP treats profits in a position like 'house money' and thinks that if a position goes into the money, the trader's total equity is less at risk than another trader whose position has moved against him. This is completely untrue. It is the mark of the beginner to think 'Oh well, it's house money, I'll let it ride. I'm exposed to less risk now'.

This latest revelation goes a long way in terms of explaining why the OP holds the strange belief that his way of trading is best for everyone.

Here's a link to that post

http://www.elitetrader.com/vb/showthread.php?s=&postid=2469784#post2469784
 
Quote from Buy1Sell2:

Scalers start with a position that is too large and have to pare back their position to a normal size in order to feel better about the trade and themselves. --Ishmael:)
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Too large by whos definition ?



By being able to trade larger, the scaler will be able to make more money as a end result compared to the risk adverse all out trader. I never feel overleveraged when I trade and the last thing on my mind is that I need to scale out because I have to much risk exposure.
 
Quote from volente_00:




By being able to trade larger, the scaler will be able to make more money as a end result c
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--and lose more because the position taken was too large. If position is correctly sized, there is never ever a reason to scale. --Ishmael:)
 
Quote from Buy1Sell2:

--and lose more because the position taken was too large. If position is correctly sized, there is never ever a reason to scale. --Ishmael:)
More...



As long as one's win rate is 50% with a 1 to 1 r:r then it is still more profitable to trade a larger position. Change it to 3:1 and the win rate can be far less than 50%. :)
 
For those who do not wish to follow the link, this is the post:

"JamesJ


Registered: Mar 2006
Posts: 220


06-30-09 03:33 PM

sell just a part when you would normally take the whole profit,
this way you feel much more comfortable, and you should be able to let the rest run with a pretty far trailing stop or stop at entry."
 
It's quite interesting - with this last citation, the OP has made our case against him!

The OP has been forced to claim that the only reasons that traders have for scaling out are the wrong ones. This can be seen earlier, when the OP continually and in the face of withering evidence to the contrary continued to parrot the claim that the reason traders scale out is that they have reached arbitrary points such as 'the break even point' or '$1000 profit'.

This last post is just a continuation of these disingenuous attempts to blur the issue.

Of course it is wrong to take positions off if price action doesn't warrant it.

Please recall that this member has also made the following claims

1) Daytrading is inferior behaviour (the OP is a failed daytrader)

2) Scaling in is inferior behaviour

3) Trading from both sides (i.e. being willing to go long and short in the same trading interval) is inferior behaviour (think about that one for a minute!)

4) The optimal exit point for any trade can be determined before the trade is place, and

5) even more bizarre, the end of a future price move can be detrmined through backtesting

Scaling out is often optimal, especially when positions have been established by scaling in. More generally, scaling out will be optimal when price action shows that the market conditions which obtained when the trade was placed have changed.
 
For those who missed it, I will repost this, which shows how flawed the OP's general ideas about trading truly are. One common mistake made by beginners is to think of unrealized profits in a position as 'house money', and to think it's ok or somehow not a loss if those profits are given back.

-------------------------------------------------------------------------------------------

Buy1Sell2 has recently revealed that he has a fundamental misunderstanding of VAR (value at risk). The OP treats profits in a position like 'house money' and thinks that if a position goes into the money, the trader's total equity is less at risk than another trader whose position has moved against him. This is completely untrue. It is the mark of the beginner to think 'Oh well, it's house money, I'll let it ride. I'm exposed to less risk now'.

This latest revelation goes a long way in terms of explaining why the OP holds the strange belief that his way of trading is best for everyone.

Here's a link to that post

http://www.elitetrader.com/vb/showthread.php?s=&postid=2469784#post2469784
 
One of the real nice benefits that I get by using all in all out is that when the position is going heavily in my favor, I have the full position on and I reap the best reward. By using trailing stops, I manage my risk and let the trade run. There are times when profit will be given back, but the bigger winners more than offset that and create superior profits. Folks who scale out will NEVER have their full position on for the bigger winners, but will ALWAYS have their full position on for the losers both big and small. All in all out just makes good sense. --Izzy:)
 
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