Alot of my trades are made on a retracement to a certain point so I find myself constantly second guessing myself as to scale in or just put on my whole position at once. When price is approaching my indicator I feel confident in putting on my whole position in one spot, but if price continues a little further I have found that to be an even better low risk entry. Am I shortchanging my self by not scaling in?
Most of my positions that i get into i do not scale in. I do however, 95%, of the time scale out of stocks. The other 5% is when i am wrong and i either NX out right away or I market out 100%.
Problem is you never which trades will give that better entry, which will never retrace enough, and which are not just retracing but going to hit your stop loss. I guess the answer is system dependent. If you trust your entries and exits to be the highest probabilty winners in your system, then go all at once, that is what we do. If you are a getting a high % of trades that give better entries before going to your target, maybe you are just entering to early: re-evaluate your system. Of course if you have infinite money you can keep avergaing and always win!
Let me give an example of a typical trade....a trigger his hit letting me know a setup has now formed..i use a 5 min chart for entry..part of the setup is range expansion in the last bar printed. I am looking to enter on some retracement of the range expansion but there is no guarantee that a retracement will occur and I want to be in this move. My best entries are those made on retracement towards my initial sell stop price. These are where my risk is lowest but like I said I want to be in the move. I'm thinking that I could use a buy stop above the market to ensure me entry but if its not hit right away and retracement occurs I could then look to scale in. I'm talking about a position size of around 1200 - 1800 shrs. The reason I say my risk is lower on scaling in is because my avg price will be closer to my stop price..and when I have a gain equal to my initial stop i'll exit 1/3 of my position...and move stop to breakeven on another 1/3 ...the last 1/3 has stop moved to b/e after 2 more bars are printed. I've felt that I was being to fine looking for the retracement and missed many moves because of it. But my thinking is if I can keep a buy stop above to get some sort of a position on then why not try to scale in if its to my advantage..maybe even think of increasing size of trade due to tighter stop. Just wondering if anyone else battles this and how they deal with it...remember its a daytrade so entry is pretty important .
I think you should never scale in because it leads to averaging down (or up) which is never a good thing. Its hard to only buy half and then add to it as it goes in your favor (very good). Usually you will end up doing the opposite (very bad). Worse yet, what about justifying iffy setups with only partial positions..........................................
... there isnt time dude. I typically hold for 20 minutes or less. It I'm wrong, I'm out almost immediately.