The questions that I ask myself for addressing this issue are What is my system for position sizing? Is it solely based on my risk tolerance? Is my system essentially around estimating optimal prices (and times?) - for both entry and exit? If the edge that I have is primarily (or solely) based on predicting price levels, or identifying rules about changing price levels that enables me to enter and exit, then the system could have position sizing rules that can be independent of market conditions and dependent only on risk profiles. In such cases, entry and exit can be in binary levels. However, if my system takes the market conditions and trade attractiveness into account when determining size of the position (eg - size based on relative win ratio of the trade, anticipated time in the trade, market volatility, changing market exposure at a portfolio level), as the trade develops and market characteristics change, the factor determining the size of position changes, and hence scaling out may be a superior.
Volente Good lord man, you must be a Trader and not just an armchair jock. Otherwise it is a remarkable coincidence because you certainly sound like a Trader. Where were you a little while back in this thread when I needed you with my 200 lot example?
Folks, I was joking about the plane-- I had to leave that day. There was no evasion. My point has already been proven beyond any doubt. The math that I have described says it all. This thread is not about what a person might do when the mood strikes them during a trade. This thread is about taking trades on your system from start to finish and what the expectancy of that is. Period. Each of your trade adjustments can be broken down into smaller and smaller time frames where the math would still have the same comparison against scaling out of those smaller trades. This is pretty simple stuff people. The math doesn't lie. When you scale out, you will make less/lose more when scaling out.
This has nothing to do with you figuring out what is the best postion size. It assumes that you have already done your homework! Once you have your position size set and your system expectancy set, that's when my assertion kicks in. You trade whatever your position size is to it's maturity. You don't scale out unless you have defined a position size that is too large from the beginning and are afraid. That's it--don't make this too complicated.
What was the percentage of winners that you would expect at the profit target that you defined? How many trades were put on? What was the stop loss? We'll need this info to determine if you tried the strategy correctly. Perhaps, your profit target was too large to have a positive expectation of being achieved. Perhaps, your profit target should be lower and then you could have sold all position at a lower level before the retracement. There is a good chance that your system is not sound unless it is taking smaller profits. That's ok-- The point is not whether the profit is smaller or not--the point is to let all of your positions run to that target whatever it may be.
The only time that scaling out will be equal to not scaling out is on a system of zero percentage winners. In that case, both behaviors will lose the same amount. This is inarguable.
B1S2, do you see the other side of the fence ? You can even change the point targets higher or lower but it is the same principle.
sorry, I wasn't referring to scale out vs all out, I have taken your comment as in using scaling out one will lose more than win, crossed wires.