Hard to understand why they don't retire and enjoy life on their private island/ beach, instead they love arguing here on ET. Perhaps not all of them are trading with real money as we think they are.
Mechanical System mathematical facts: When writing ANY trade system with defined entry, exit and possibly trailed stop parameters, we can run a series of optimal profit targets to see where the "sweet spot" of max overall profit and/or individual trade profit size exists. For any method or system, there exists an optimal profit exit over the course of 100, 1,000 or 10,000 trades at random. This bell curve includes all trades that stop at max loss, predefined profit target and possibly trailed stop orders as well. Any system that can be coded can likewise have quantified profit target results measured. I've done it literally 1,000s of times, as have all system writers/traders. ** In my experience of writing systems, testing optimal exits for any market, symbol or timeframe ALWAYS gave best results when exiting all contracts at once. Never in my experience did I find any system perform optimally using any type of scaled-out approach. In every example with zero exceptions, scaled-out tactics reduced overall profit AND per-trade average profit size versus all-out approach. That is a mathematical fact based on my own extensive system writing - testing. I'm not saying no one has ever written a system where scaled-out approach beats all-out... perhaps there are many out there right now. I personally have never seen one mathematical test on a system where overall profits and/or profit per trade size was better or even par to all-out when testing scaled-out approach. *** As a pure method trader, I have no way of running similar concrete data to my own current trades. I do however know this for a fact: my overall profit and per-trade profit size is greatest using all-out exits AND also holding each trade longer than I can stomach. There are lots of net-profit exit strategies in each trading system. Some are superior than others... using exact-same entry signals and stop management. Scaling out may very well help individual traders achieve net profit status, used as a brace to the emotional pressures of trading. In other words, the optimal exit strategy via pure math is difficult or impossible for traders to implement in real time trading real money. I know this much for myself: I would = will make A LOT more money by holding ALL intraday trades longer than I currently dare. I suspect the same is true for most other emini traders, too. What we must focus on is the overall cumulative result of ALL trades in a large sample size... not myopic fixation on each trade as an individual event of greater importance than any other in the sample size. Micro-managing each trade leads to early exits: logic assumes that by managing losing trades better, overall results can be improved. Mathematical reality is, managing profitable positions better is where we improve our overall bottom line. === The only way any trader knows if scaling out versus all-out exit is best for their individual use is by large data study and research of results. Compare actual results versus what would have happened using the alternative exit strategy(ies). See how the math shakes out per each 100, 200 and 500 trades in sequence or at random. The "sweet spot" exists for each trade method encompassing all market conditions and happenings. If we learn where our optimal profit targets are across any six month to one year sample size, it changes very little in time. Then manage EACH trade devoid of opinion or emotion expecting max results, and the sweet spot of curve is approached. Mathematical testing of exit strategies for every mechanical system I've examined shows scaling out as inferior to all out when human emotion is eliminated from the equation. But, we all know that human emotion plays a very large part in trading success or failure. Whatever works for you right now is what to stay with, but keep in mind there might be much more optimal strategies to manage your best trades with. Assuming all of your trades will be best is is the only way I know of to catch the runners when they run. Detailed examination of your own trade entry signal - management parameters compared to "what if" scenarios is the only way to quantify this chicken & egg debate. Hope this helps :>)
<i>"Full of wisdom, in theory."</i> Theory and live application are often miles apart. Trying to narrow that span, best we can is probably the best we can hope for
Exactly. Even inexperienced traders can generate the most amazing systems on paper, but trading them is something else entirely. LC
<i>"PS: No wonder some vendors are still being vendors."</i> Don't ya just hate that, <b>Odd</b>? I'm sure you agree the only thing worse than that are quasi-traders who've been on this board for years, have 1,000s of posts to their credit while absolutely none are original thoughts. Just a bunch of mindless retorts to counter whatever someone else offers as helpful experience or opinion. Once you look past those brain-drain leeches here, we can glean some helpful & constructive stuff together, now can't we?
<i>"Looks like you can't stop dreaming, can you?"</i> Dreaming of what? Other than monster racks & methodical emini profits, that is
imo, scaling out and non-scaling out are both valid alternatives for exits. The use of them would be very much depending on how to structure trading startegies according to individual trader's trading style. Bye!