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 Forums ›› Technically Speaking ›› Strategy (System) Design ›› "Scaling out" is inferior behavior

 Do you scale out of positions? You do not have permission to vote on this poll. I always scale out 103 14.09% I scale out most of the time 205 28.04% Most of the time, I do not scale out 179 24.49% I never scale out 244 33.38% Total: 731 votes 100%

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 bigarrow   Registered: Mar 2005 Posts: 4551 11-15-11 02:07 PM 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. 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. Edit/Delete • Quote • Complain
 Buy1Sell2   Registered: Jan 2006 Posts: 8117 11-15-11 02:18 PM 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 Edit/Delete • Quote • Complain
 Riffraffpatrol   Registered: Feb 2011 Posts: 236 11-15-11 04:48 PM 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. 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... Edit/Delete • Quote • Complain
 volente_00   Registered: Nov 2002 Posts: 13711 11-17-11 02:40 AM 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 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. Edit/Delete • Quote • Complain
 Riffraffpatrol   Registered: Feb 2011 Posts: 236 11-17-11 03:11 AM 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. 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. Edit/Delete • Quote • Complain
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