"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
So far I haven't jumped into this debate, but since we have now practical testing results, we might as well do a real life comparison, instead of just theoretical chit-chat.
Just a note for the debaters, BOTH strategy eventually requires some kind of decent timing. Even with scaling in and out you can lose or miss big profits, but chances are better that you will make something.
Now we have 2 posters who had very similar short positions on posted in their Journals, one was scaling in and out (Nitro) the other put the whole position on all at once (B1S2). Let's see how they are doing:
1. Nitro scaled into the short 3 times from between 1186 and 1220. He got out of that position with 42, 76 and 139 pts of gain, overall a 85 pts profit on the full position.
2. B1S2 went short at 1190, full position. Since then the position went:
a/ From +60 to -20
b/ From +90 to zero
c/ From +120 to +70 (currently 70 pts unrealized gain)
That is more than 200+ pts unrealized profits given up. Of course it is possible that B1S2 eventually will close the full position with a very nice gain, but he sure missed out on lots of would be profits already.... Chances are had he used a little scaling, his profits would be bigger....
Just a note for the debaters, BOTH strategy eventually requires some kind of decent timing. Even with scaling in and out you can lose or miss big profits, but chances are better that you will make something.
Now we have 2 posters who had very similar short positions on posted in their Journals, one was scaling in and out (Nitro) the other put the whole position on all at once (B1S2). Let's see how they are doing:
1. Nitro scaled into the short 3 times from between 1186 and 1220. He got out of that position with 42, 76 and 139 pts of gain, overall a 85 pts profit on the full position.
2. B1S2 went short at 1190, full position. Since then the position went:
a/ From +60 to -20
b/ From +90 to zero
c/ From +120 to +70 (currently 70 pts unrealized gain)
That is more than 200+ pts unrealized profits given up. Of course it is possible that B1S2 eventually will close the full position with a very nice gain, but he sure missed out on lots of would be profits already.... Chances are had he used a little scaling, his profits would be bigger....
My conclusion has 30 years of data, 30+ futures and 20,000 trades.
What actual data do you have?
I have a system that never scales out. It is a 100% win system. It trades once every 100 years.
I have another system that always scales out 1/2 very quickly after entry. It is a 45% winning system that produces 2.5-1 size of winners over losers, and trades 25 times per week.
I know which system is inferior. The inferior never scale out system of mine is very similar to Buy1Sell2's system, but inferior to my other system and many others, it is still and always will be, superior to his.
I won an olympic marathon gold medal twice, the first time I did it barefoot. So I'm superior too.
I have another system that always scales out 1/2 very quickly after entry. It is a 45% winning system that produces 2.5-1 size of winners over losers, and trades 25 times per week.
I know which system is inferior. The inferior never scale out system of mine is very similar to Buy1Sell2's system, but inferior to my other system and many others, it is still and always will be, superior to his.
I won an olympic marathon gold medal twice, the first time I did it barefoot. So I'm superior too.
What you have here are folks missing the point of the discussion. It's not about which system is better. It's about making a system, once chosen, more profitable or less costly. We can discuss how I could have reloaded several times, but if that was the system that I was using, then I would have been more profitable removing the entire position and reloading, not part of the position and reloading. Nitro would have been more profitable, unto himself , doing that instead of scaling. 
Since both positions are closed, we can declare a winner...
B1S2 closed out finally the short today for a minoscule 10+ pts gain, after giving back 90+% of the unrealized gains...
Overall he gave back 80 + 90 + 110 = 280 pts unrealized gains.
Nitro 85 pts vs. B1S2 10 pts (you decide)
As I said earlier, doesn't matter which strategy you use, it eventually requires some short of timing. But if you REALLY can't time the market, just scale in and out...
Now can we put this thread to rest???
B1S2 closed out finally the short today for a minoscule 10+ pts gain, after giving back 90+% of the unrealized gains...
Overall he gave back 80 + 90 + 110 = 280 pts unrealized gains.
Nitro 85 pts vs. B1S2 10 pts (you decide)
As I said earlier, doesn't matter which strategy you use, it eventually requires some short of timing. But if you REALLY can't time the market, just scale in and out...
Now can we put this thread to rest???
Prudent and proper trade management dictates that if it makes sense to remove some of a position, then it makes sense to remove it all. Thus, when some one asks if a trade would have benefited by scaling after it has given back profits, the answer is no--it would have made better sense to remove the entire position. What a person is doing by scaling is enhancing their psyche, not there bank account.