To scale out or not to scale out,
- Thread starter Stockboy
- Start date
That's the wrong question
You have to look at your position as if you just opened it. Then ask yourself the question: "Can I win more here?" If so, you stay or add. If not, you just close.
When you're not sure, you've got no trading plan.
Edge is not something you have when you enter a trade. It's subject to review in real time.
You have to look at your position as if you just opened it. Then ask yourself the question: "Can I win more here?" If so, you stay or add. If not, you just close.
When you're not sure, you've got no trading plan.
Edge is not something you have when you enter a trade. It's subject to review in real time.
Great feedback!
What do you mean that is the wrong question? I am a bit confused at that. The wrong question to what exactly?
This thread is to see if there are successful traders that dont scale out of their winners and discuss this topic.
I am not asking you to teach me how to trade, if that is what you thought the question was for some reason.
It is also about scaling out, not scaling in as youve described, nevertheless you did provide good feed back. Thank you
Scaling out or not is the wrong question. Managing positions should be part of your trading plan because there is zero difference in expected value of scaling out or not over the long run.
IF your trading plan says you are trying to establish a core position and it should be traded around that position, scaling in and out is the way to go.
On the other hand you will start to scale as soon as you hit the liquidity limits for the assets you're trading
IF your trading plan says you are trying to establish a core position and it should be traded around that position, scaling in and out is the way to go.
On the other hand you will start to scale as soon as you hit the liquidity limits for the assets you're trading
All in and All out.
When the trade gets an exit signal it is over. I have taken my small piece out of the market and move on.
Since reading your post on not scaling awhile ago I shifted from 50/50 to 80/20 and it's working better, so big thanks. Out 80% at first sign of trouble, eg 2dlow for swings.
Good trades are usually right from the start. Scaling into winners then selling most into pullbacks is good.
All in all out is by far the easiest to analyze.
One aspect of scaling is that it essentially splits your strategy into several sub-strategies (although still highly correlated). That can be a crude way to increase your Sharpe/reduce variance.
Mostly however, whether scaling is good or bad depends on
One aspect of scaling is that it essentially splits your strategy into several sub-strategies (although still highly correlated). That can be a crude way to increase your Sharpe/reduce variance.
Mostly however, whether scaling is good or bad depends on
- if you end up adding or subtracting alpha when you're making the additional trades (for one of the many short intraday trends, you might well be giving up most of the profit by scaling in).
- if it helps you psychologically stick to your plan due to, say, smaller losses due to scaling in slowly into a trend, or similar to take some of profit quickly.
- size traded; all in all out crossing the spread is going to strain market liquidity to the max.
Thank you.
I agree.
and psychologically, I think personally scaling helps me. It could also either be helping or hurting my PnL, not quite sure yet. there is also a school of thought about getting comfortable being uncomfortable.
Great input so far thanks to all
You should be able to scale in and scale out, IF NEEDED. You should be able get into (many) a trade where you are good to go without scaling, or "scaled up" from the get go. Scaling is just another tool. Know how to use it, NOT abuse it, and when not to use it.
No magic bullet, more like another way to manage the trade. On one hand, if your tactics never calls for it, then "that is that". If your tactics allow it, it should be well thought out.
No magic bullet, more like another way to manage the trade. On one hand, if your tactics never calls for it, then "that is that". If your tactics allow it, it should be well thought out.
