"Scaling out" is inferior behavior
- Thread starter Buy1Sell2
- Start date
you dont understand a thing about probabilities then. All in and all out can be a viable approach at times when you have a high-probability setup and extremely strong conviction. However, statistically it can be shown that it is not inferior to still trade when you have a relatively strong conviction but markets are somewhat volatile by using a scale-in/scale-out strategy approach. If you cannot imagine or picture a scenario where this makes more sense then you lack probabilistic knowledge.
The scaler will have smaller wins over the long haul.
says who? You? And who are you?
Your recommendation is contrary to everything professional bank and hedge fun traders do. And they do not only do that for reasons of reduced market impact they do it because it sometimes is the optimal approach to entering and exiting positions. You provided zero evidence statistically why entering and exiting ALWAYS is better. It simply is not.
Your recommendation is contrary to everything professional bank and hedge fun traders do. And they do not only do that for reasons of reduced market impact they do it because it sometimes is the optimal approach to entering and exiting positions. You provided zero evidence statistically why entering and exiting ALWAYS is better. It simply is not.
It's interesting how people continually miss the point and offer discussions which are not germane to the subject at hand. The thing to remember is that different trade set ups and proper risk management may dictate 2 contracts on a trade, or 4 contracts or 12 etc etc etc. If the proper amount of contracts(shares) under your system is 4, then the entry of 4 should occur all at once, and the exit of 4 should occur all at once. If scaling in or out, then over the long haul, you will not reap full benefit. You will only reap the full benefit, or the least drawdown, by being all in and all out with full position on each trade. It doesn't matter though that I am handing out one of the keys to the kingdom---as very few, if any, will find merit in this proven tenet.
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
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
you continue talking bullshit. So far you made the same statement over and over and have not once produced one single statistical backup why your claim might be standing on sound footing.
Proof of the mathematical superiority of full position in, full position out has been showed irrefutably time and again. Most will attempt to make the discussion into something that it is not. Very simply, it doesn't matter what strategy is used, over the long haul, you will make more, or lose less, by not scaling in or out. It is absolutely mathematically correct.
Ok, please provide a link that details the mathematics behind your claims. We are all waiting.
So far nothing from our friend, I thought so...big mouth, no math nor probabilities skills.