"Scaling out" is inferior behavior

Discussion in 'Strategy Building' started by Buy1Sell2, Oct 18, 2006.

Do you scale out of positions?

  1. I always scale out

    113 vote(s)
    14.1%
  2. I scale out most of the time

    228 vote(s)
    28.5%
  3. Most of the time, I do not scale out

    189 vote(s)
    23.6%
  4. I never scale out

    270 vote(s)
    33.8%
  1. Buy1Sell2

    Buy1Sell2

    No, I would have made more by taking the full position off at the 228 points than by taking half off as you describe here. You are confusing the discussion of scaling with the discusion of proper entry /exit. :)
     
    #1081     Mar 27, 2008
  2. volente_00

    volente_00


    2 contract traded per trader

    SCALER
    10 trades

    8 winners

    1 x 4.5 points for half the position
    1 x 9 point for the other half


    2 losers for 3 points each


    NONSCALER
    10 trades

    3 winners for 2 contracts x 9 points each

    7 losers for 2 contracts x 3 points each



    4 dollar commission





    :D
     
    #1082     Mar 27, 2008
  3. volente_00

    volente_00

    Then why did you not do it ?

    Your argument works logically but not in practice.


    Of course if every scaler knew before hand what the trade would do then yes he would make more money selling the whole position at the optimal exit target but the fact remains is that no one knows exactly what the market what will do so scaling gives you the opportunity to exit half at what you may think will be optimal target and let the trade run versus missing not selling any at the optimal point and letting it come back to your trailing stop and giving up extra profit.
     
    #1083     Mar 27, 2008
  4. Buy1Sell2

    Buy1Sell2

    In your example, I noticed that the scaler is getting the benefit of 80 percent of setups going as far as 9 points, but the non scaler's trades only go to 9 points 30 percent of time. Certainly the non scaler's trades would move 9 points 80 percent of the time as well. :)
     
    #1084     Mar 27, 2008
  5. Buy1Sell2

    Buy1Sell2

    Volente, this is a totally different discussion. The discussion you are trying to engage in here is about proper entry/exit, not whether or not to scale in or out. :)
     
    #1085     Mar 27, 2008
  6. candles

    candles

    :)
     
    #1086     Mar 27, 2008
  7. Again, your examples are obviously going to work out in your favor, since that's your argument. Where are you picking these figures from? No one that I know that scales out does so in 2 increments, one at 50% of target and one at 100% of target. Maybe they take some off at 75%, some at 100%, then let some run to 125% and 150% (just as a slightly more reasonable example). Assuming equal lots at each level, tell me, who makes more money, this scaler or someone who unloads it all at 100% of target?

    Besides, in your first example, you're assuming that every trade that the scaler got out at 4.5 pt profit would've reached 9 pt. profit before getting stopped out. Do you honestly think that's realistic? If one trade doesn't do that (which is very likely in reality), the results of the two "systems" change drastically.

    See, any one can come up with hypotheticals to support either case. In the real world, things work a little differently. The only situation in which going all in/out will always outperform scaling is if you know the exact bottoms and tops, which no one does.
     
    #1087     Mar 27, 2008
  8. Buy1Sell2

    Buy1Sell2

    Pick any increments. It really doesn't matter. :)
     
    #1088     Mar 27, 2008
  9. Ummm, okay, how about the one in my first paragraph then?
     
    #1089     Mar 27, 2008
  10. Buy1Sell2

    Buy1Sell2

    It depends on how often it runs to 125 or 150. If it runs there often enough, then one of those should really be the 100% target and the optimal target has been calculated wrong from the beginning. Optimal targets for setups can be calculated by anyone using backtesting etc. As you know, I use trailing stops with full position on. :)
     
    #1090     Mar 27, 2008