"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
Quote from Buy1Sell2:

The trader with poor timing who scales would have taken profit on some of the positions earlier than the point that he removed all of them totally. This is one of the reasons all in all out benefits every system. It's not whose system is better at entries and exits. It's how the all in all out benefits a trade unto himself. :)
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Thanks B2S for proving my point that you don't know what you are talking about relative to scaling being inferior as universal truth-- you couldnt be farther from the truth.

You completely failed to explain how your logic benefits the real world example I gave you.

The reason is it clearly is a DETRIMENT--not a benefit.

You need to wake up to the reality that the ONLY way you could ever even possibly prove your notion is a benefit at all is after the fact- individually on a completed trade basis in which an analysis is made on the trader who had a set of rules on where one would scale vs where one would exit full position vs ultimately what the completed chart pattern revealed. Then... and ONLY then-- could you even prove whether it worked or not. In the meantime- while true the perfect entry is irrelevant-- a perfect exit on a full position is the only possible way in a completed trade that you could prove without any further analysis on whether your theory is correct-- are you that shallow that you cant acknowledge this???

Get off your high horse and humble yourself by admitting that your theory has major flaws.. It contains many assumptions that simply arent realistic. What is realistic however is my example I gave you- again of which you refused/failed to acknowledge.

Common sense? Riiiiighht...
 
Quote from bigarrow:

You keep supporting your thesis with a philosophical argument when it is a math problem. You need to supply the math to support your argument.
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He can't do it.

He will continue to repost useless drivel on a perfect scenario that obviously can be written to fit his thesis as a basis for it being universal truth... WITHOUT acknowledging the infintesimal scenarios where it fails...
 
Quote from Buy1Sell2:

08-13-11 10:17 PM

Now, the example of the trader who is using a losing system:

Four ES Contracts 90% win ratio all in/all out versus
Four ES Contracts 90% win ratio scaling out at half target.

1 pt target 10 pt initial stop loss

1st example with 20 trades
18 winners for 1 X (4 contracts) = 72 pts ($3600)
2 losers for 10 X (4 contracts) = -80 pts (-$4000)
Net loss $-400


2nd example with 20 trades
18 winners for 1 X(2 Contracts)=36 pts ($1800)
18 winners for .5 X(2 Contracts)=18 pts ($900)
2 Losers for 10 X(4 Contracts) =-80 pts (-$4000)
Net loss $-1300

As you can see, even the trader who employs a losing system will lose less by not scaling out. --Ishmael:)
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key word is TARGET


If the trader is like you with no definitive target then they will almost always be more profitable with a smoother equity curve by scaling out instead of giving profit back to the market and even letting big winners to into losers.
 
Quote from volente_00:

key word is TARGET


If the trader is like you with no definitive target then they will almost always be more profitable with a smoother equity curve by scaling out instead of giving profit back to the market and even letting big winners to into losers.
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This is misleading....as if having a target changes things-- it doesn't.

Consider even if one does has a definirive target. What if price never gets there and reverses? Holding for an "all out" served what purpose? Certainly not one's wallet.

Scaling out at predetermined % levels toward T1 ALONG WITH MAINTAINING A REMAINDER OF THE POSITION for a continuation to T2 T3 etc on the other hand ensures
profitability.

If one wants to set a modest Target with no interest in pursuing further movement- obciously "all out" maximizes profit-- BUT ONLY IF THE TARGET IS HIT!! Hellooo...?

No one with certainty knows in advance if this will happen-- but I can tell you with utmost certainty- there will be plenty of times it wont.
 
Quote from Riffraffpatrol:

This is misleading....as if having a target changes things-- it doesn't.

Consider even if one does has a definirive target. What if price never gets there and reverses? Holding for an "all out" served what purpose? Certainly not one's wallet.

Scaling out at predetermined % levels toward T1 ALONG WITH MAINTAINING A REMAINDER OF THE POSITION for a continuation to T2 T3 etc on the other hand ensures
profitability.

If one wants to set a modest Target with no interest in pursuing further movement- obciously "all out" maximizes profit-- BUT ONLY IF THE TARGET IS HIT!! Hellooo...?

No one with certainty knows in advance if this will happen-- but I can tell you with utmost certainty- there will be plenty of times it wont.
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If you have a fixed target on every trade and scale out before letting it reach that target then buy1's argument holds water.

Also the larger the target the more benefical scaling would be in ES in terms of it affecting the overall win rate on the trades.


If i bat 90% with 1 point targets and 1 point stops then it would be stupid to scale out at .5 profit on the trade. Now turn it around and say I bat 20% with 100 point targets with 100 point stops and if scaling is shown to increase my win rate to 40, 50 60% then it will most likely be more profitable to scale out to smooth out the equity curve.


I like scaling if I don't have a strong conviction of my target. It gives you a chance to let winners run versus cutting them short if you exit the full position while reducing your overall risk on the trade. Sometimes I will see a trade I like but not a full conviction of where I think it will go to so I will enter larger size, scale out once it becomes profitable and use the profit from the scale out for the stop on the remainder to back the rest of the trade idea.
 
Quote from volente_00:

If you have a fixed target on every trade and scale out before letting it reach that target then buy1's argument holds water.
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Not it doesn't. Why? Because the issue has always been about profit optimization... not merely hitting a goal and merely being satisfied with it. Your statement only holds true with 100% certainty under one extremely remote condition and one condtion only-- your target was the high of the day if long or low of the day if short.
Then and only then can one say with 100% certainty that scaling out was inferior.

Also the larger the target the more benefical scaling would be in ES in terms of it affecting the overall win rate on the trades. [/QUOTE]

Agreed.


If i bat 90% with 1 point targets and 1 point stops then it would be stupid to scale out at .5 profit on the trade. [/QUOTE]

Again- we are talking about profit optimization. If one were to have the uncanny ability to pick the high or low of the day for a target consistenty then of course one would be an absolute ignoramus to scale out. Over the long haul this is simply impossible-- therefore using examples like this is completely moot. The reality is a very high % of the time you will see you indeed did not get the high or low and having a portion of the position still on allowed for capturing profit well past your target...while increasing your win % for those 10% of trades where price went to 50% of target but reversed and hit a stop. This is all about probabilities... think about it... nothing more.


Now turn it around and say I bat 20% with 100 point targets with 100 point stops and if scaling is shown to increase my win rate to 40, 50 60% then it will most likely be more profitable to scale out to smooth out the equity curve. [/QUOTE]

Agreed.


I like scaling if I don't have a strong conviction of my target. It gives you a chance to let winners run versus cutting them short if you exit the full position while reducing your overall risk on the trade. Sometimes I will see a trade I like but not a full conviction of where I think it will go to so I will enter larger size, scale out once it becomes profitable and use the profit from the scale out for the stop on the remainder to back the rest of the trade idea. [/QUOTE]

Perfect.
 
401k'ers scale in because they don't have the money earned yet to invest. On the back end, they don't need all of the account at once so they scale out. These are the only situations where scaling acceptable. For every other trade/idea, all in all out simply reaps the greatest benefit over the long haul. The math doesn't lie--I have demonstrated it numerous times here. :)
 
Quote from Buy1Sell2:

401k'ers scale in because they don't have the money earned yet to invest. On the back end, they don't need all of the account at once so they scale out. These are the only situations where scaling acceptable. For every other trade/idea, all in all out simply reaps the greatest benefit over the long haul. The math doesn't lie--I have demonstrated it numerous times here. :)
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Roflmao-- u haven't demonstrated squat buy2sell-- who do u think you're kidding?

I challenged you with a very real world scenario weeks ago and you were dumbfounded with silence. Why- because your theory is faulty for numerous reasons that I have already pointed out that are impossible for you to refute.

I'm just not quite sure whether you a) have too much pride to admit when you are wrong, b) are too stubborn to think outside of the box to truly analyze the flaws in your mantra... or c) are just too ignorant/shallow/naive in your thinking the get it.
 
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