Strange... Why would you ,if you open a position, risk the loss of 3 contracts when you are wrong and when you are right, scale off?
if you are wrong, you are wrong from the start (cut losses), if you are right you are right from the start, but if you are right, you dont know how right you will be, so scale out 1. to lock in profits in case the market reverses 2. to stay in a trade longer in case the market takes off (let profits run) pretzel 'You never know what will happen next."
Agree with metooxx, used to dick around scaling on entry but realized it just meant I wasn't sure of the trade. Wait for one I feel better about. Always exit all at once, it muddles seeing the next opportunity if your still in the remnants of last one.
Yes, thats my experience so far - I have my last contract remaining when there is another entry signal. I'm considering one of 2 things - 1. make the target for the last contract tighter so that I will be flat when the next signal arrives 2. keep my current target but open a new position when the next signal arrives even if my last contract is not yet out (= scaling in another set) pretzel
Try this, Track your system entries and exits with min and max excursion after signal. Put together a plan to capture more efficient entries and exits, "with scaling methodology" based on the excursion range. Spreadsheet your results and get a plan. Scaling will enable safer and higher profits overall with my experience. Without knowing your system and how it trades...it is difficult to comment on the scaling question. Michael B.
I am never sure of any trade I do... trading is a laboratory of uncertainty and always will be so... all I am comforted by are my historical results...
Everybody has their opinion on this issue. Some defend it, others condemn it. My personal take on this issue is that there are definite trading environments in which scaling is the best way to ensure that you have exposure and flexibility without necessarily increasing your risk exposure. At other times, there is a true opportunity cost to trying to get cute with the entries and prematurely taking exits. Right now, late April, early May, there have been a number of sessions where the best path has been to simply enter all at once and wait till your target is hit. In other words, I think the movement is "cleaner" now than it was say in any time between the end of January and the middle of March. At that time, many were frustrated with the lack of follow thru, the dominance of the programs and the overall skiddishness of prices. I believe scales work in an environment such as that when you have such a great level of "noise" and so much chop between levels that you want that extract flexibility to average the cost. One could also argue that those are times not to trade at all, but since we are talking about basically trading on a daily basis, that is an adjustment that I think has merit...
Thanks Pretzel... Douglas has had quite a profound effect on the way I view things... I am impressed that you spotted that I was paraphrasing some of the essence of Trading in the Zone...