Discussion in 'Trading' started by Gordon Gekko, Sep 24, 2002.
more often than not, do you in some way scale in/out of a position?
So if 70% of the people scale positions, are you going to scale, too?
hehe probably. by the way, by scaling i also meant adding to winners. i didn't really phrase my question correctly. anyway, if 70% of profitable traders do, and i never did once for 3 years and i don't make money....maybe it's something i should consider? would you agree?
I love the idea of scaling, especially in noise covered price markets. Super_ego may have been obnoxious, but he made a very critical point. Prices tend to snap back to the 5ma. Look at the 250 tick chart for ES today and see how you could use scaling to your advantage with his method.
I abandoned the madness long ago and just said to myself, "Screw all these trading axioms, I'm developing my own system." I took a bit from here and a bit from there and came up with something that works for me.
If you pull up the 250 tick ES chart for today and stick a 5, 10 and 20 MA on it, you will see what I am talking about.
Now, take that basic system, trade it and refine it as you notice short-cuts to profits. In other words, most of the best traders I know of eventually got to an intuitive based trading system from years of experience -- but in the meantime, you and I -- the new kids on the block (no pun intended), need to stick to a solid system that will keep up alive until we know how to get to that intuitive based world of trading.
I'll scale in a few times a year when I think I should be playing for a big move, like may be coming up soon at Dow 6500, AND when I also think it should be worth it to gut-out the risk. Otherwise, all-at-once.
how about adding to winners? i meant to include that in my poll question.
I buy all at once, don't add to winners, and usually sell all at once. I will sometimes scale out and sell in thirds as price hits different targets, but it is rare.
It would depend on the market, IMO. Also, it would depend on your timeframes. When you scale like that, you are raising your average purchase cost per share/contract -- that is pulling you further from buying at a bottom. If you average down/up, you are getting closer to the bottom/top, in the hopes that your system will play out correctly and you will get the reversal -- or perhaps you are already riding a trend and feel like averaging down/up when there is a retracement.
However, there are so many techniques one could use but only a few that work for that specific person. You have esignal now and I'm writing that program for you to practice trading with -- if you are really serious about trading than I would stop reading those books and sit down and watch the ES move -- ALL DAY LONG.
Watch the ES move for a few weeks -- at least 4 hours a day. It is boring, but it is WORK. It takes a lot of discipline to sit there and watch it move all around and not do anything else.
If you do that, I assure you small but important things will start popping into your head. If you watched this morning and were aware of the CC number that came out at 10:00am, you would have noticed how the ES reacted. It ran up fast, sputtered, and resumed an uptrend for awhile. If you keep observing these type of reactions, you learn how you can profit from them.
I have watched the ES move 4 hours a day for about a month, and I have learned more about the market than all the trading books combined and then raised to the 7'th power.
Watch the ES move all day, Gordon. Observe the tape, too. Put it right next to the chart. Just watch it -- you will learn plenty just from that.
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