"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
Buy1Sell2 said:
You are making the same mistake that a lot of posters have made before you. --You are talking about individual trader's strategy where I am talking about what outperforms on EVERY strategy. For example, if I employ a losing strategy, I will lose less by not scaling in or out. This is because when I have a winning trade within the losing strategy, I will reap greater benefit by having my full position on at outset and the trade will run to maturity as defined by the strategy with full position. This is not about whether or not, on a particular trade , I should have done this or that. --Yea, I may have a losing strategy, but it will lose less by not scaling.
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Taking this truth to the extreme, a trader should not only enter and exit with full position, but full position should be maximum size a.k.a."all-in"... then out performance against other strategies AND maximum profit for the strategy being traded could be attained.

11 year running discussion, pretty damn funny. o_O:D
 
Buy1Sell2 said:
Excellent posting.
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That's a poor example to be referencing, he doesnt know what the hell he's talking about.

Scaling in and out is a different level altogether, focus on getting 1+1 = 2 right first before moving to algebra.
 
50 % winning percentage 4 ES Contracts 20 trades 2 pt target 2 pt loss

1st example without scaling out

10 winners 2X(4 Contracts) = $80 pts ($4000)
10 losers 2X(4Contracts) = $80 pts (-$4000)
Net profit 0 before commissions


2nd example with scaling out half at 1 pt
5 winners 2X(4 Contracts) =40 pts ($2000)
5 winners 1X(4 Contracts) =20 pts($1000)
10 losers 2X(4 Contracts) = -80 pts (-$4000)
Net loss before commissions=-$1000
 
Buy1Sell2 said:
50 % winning percentage 4 ES Contracts 20 trades 2 pt target 2 pt loss

1st example without scaling out

10 winners 2X(4 Contracts) = $80 pts ($4000)
10 losers 2X(4Contracts) = $80 pts (-$4000)
Net profit 0 before commissions


2nd example with scaling out half at 1 pt
5 winners 2X(4 Contracts) =40 pts ($2000)
5 winners 1X(4 Contracts) =20 pts($1000)
10 losers 2X(4 Contracts) = -80 pts (-$4000)
Net loss before commissions=-$1000
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But there are more than 2 possible strategies and outcomes.
 
JSSPMK said:
But there are more than 2 possible strategies and outcomes.
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Certainly. But the math will still show that scaling is inferior no matter what the strategy is. All in all out will outperform scaling over the long haul on every strategy.
 
Buy1Sell2 said:
Certainly. But the math will still show that scaling is inferior no matter what the strategy is. All in all out will outperform scaling over the long haul on every strategy.
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Not if win rate is very low, as your losses will eat up all eventual profit, whereas scaling out will be in profit as win rate will be much higher due to banking part of position early on.
 
JSSPMK said:
Not if win rate is very low, as your losses will eat up all eventual profit, whereas scaling out will be in profit as win rate will be much higher due to banking part of position early on.
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NO--Win rate would be just as high for the all in out trader exiting at the point that the scale got out.
 
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