"Scaling out" is inferior behavior

[volente_00]

Correct. It's human nature to want to be right. Trading is not about being right.

I disagree

If you are wrong on direction you will lose money every single time.



Human ego does not handle failure well. A losing trade is a short term failure. This is why most lose long term in trading. They can't wrap their mind around the long term probability even if the edge has a long term positive expectancy. A day means nothing, a week is pointless, but if you have a losing month over and over then the edge was never there to begin with. Scaling out accomplishes a couple of important concepts. It rewards your ego by banking some profit, it reduces the drawdown if it is done properly so that a winning trade rarely turns into a loser. Sure you would make more if 100% of your trades hit your exact profit target, but what if it does hit your target ? You scale out and trail the stop and give the trade freedom to reward you further.

 

[murray t turtle]

Correct. It's human nature to want to be right. Trading is not about being right.

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The turtle$ did so well with a low % win rate; look @ other things ,2 .LOL I certainly am not against the turtles..........................................................Wisdom is profitable to direct; most small + medium businesses have a high failure rate, but worth looking into, if a person likes business.

 

[Buy1Sell2]

--A great way to keep trading decisions to a minimum and to curb the temptation to scale in or out is to set your position and stop and head out to play golf without any connection to pricing.

 

[comagnum]

I always scale in/out - it is at the core of my risk/trade mgmt. It allows me to keep my losing trades to be significantly smaller than my winning trades - like risking .30 BPs to make 500-2,000 Bps - now that's skewing R/R in your favor. Scaling allows me to engaged in the market with a lot less risk on losing trades and more size on the winners.

 

[Buy1Sell2]

I always scale in/out - it is at the core of my risk/trade mgmt. It allows me to keep my losing trades to be significantly smaller than my winning trades - like risking .30 BPs to make 500-2,000 Bps - now that's skewing R/R in your favor. Scaling allows me to engaged in the market with a lot less risk on losing trades and more size on the winners.

Un fortunately, this means you will have less size, not more size on the real winners. ---Scaling will have you make less over the long haul if you're profitable and have you lose more in the long run if you're not.

 

[lovethetrade]

No, scaling out at the wrong time is inferior behavior.

 

[Buy1Sell2]

I always scale in/out - it is at the core of my risk/trade mgmt. It allows me to keep my losing trades to be significantly smaller than my winning trades - like risking .30 BPs to make 500-2,000 Bps - now that's skewing R/R in your favor. Scaling allows me to engaged in the market with a lot less risk on losing trades and more size on the winners.

You've not done the math properly on this. You need to be in winners with full position to reap the best benefit or to lessen losses.

 

[Buy1Sell2]

No, scaling out at the wrong time is inferior behavior.

It is always the wrong time to scale out. For example, if you scale out and runners continue in the direction of the trade, then you have choked off profits. --If you scale out and your runners pull back , they either reduce their gains or turn into losses. Thus, you would have been better off to have gotten out of the position all at once.

 

[Buy1Sell2]

If you let the entire position pull back and reduce gains or turn into losses, develop a system that will ensure that those pullbacks are much more than offset by the big winners that you will have. Can you make money scaling in or out? Yes. Can you make more by not scaling in or out? Most certainly.

 

[lovethetrade]

It is always the wrong time to scale out. For example, if you scale out and runners continue in the direction of the trade, then you have choked off profits. --If you scale out and your runners pull back , they either reduce their gains or turn into losses. Thus, you would have been better off to have gotten out of the position all at once.

You have to know when to unwind some of your position. There's different grade of signals. That's one of the benefits of back-testing.

Different market conditions require a different approach also.