"Scaling out" is inferior behavior

Now run the first example with the higher profit targets that woud be achieved by letting the trade run( I believe you had one trade run to 10 points). Also, remember that we would get out at breakeven on two as well.

 

Here is essentially what my disagreement is about. IMO, position sizing need not be determined ony by personal risk profiles (2% etc.) it could also be determined by how attractive a trade is, what are the current market conditions etc.

This is quite similar to Ed Thorp's position sizing for blackjack strategies. As the deck becomes more favorable, increase your size of the bet, as it deteriorates, decrease your size of the bet, not necessarily in a binary fashion.

 

What happens after the scale out is unpredictable future average, only past results will indicate true average.

I see m4a1 made a short call in ES J where he is attempting to use a 1:3 using a specific entry strategy, right now there is a reversal signal going on, he is obviously holding, when a scale out trader would have pulled out of 50% position and/or reversed the trade. Is m4a1 to hold this position till he is -2pts down or exits at entry is irrelevant. A scale out trader has made a profit when m4a1 will either make 0 or incur a loss.

 

I misunderstood what you meant in your first post. I agree with this.

TNG

 

I'm fine with the adjusting sizes to your tastes as long as the 2 percent rule is not violated. But once in the trade, you stay for the duration unles you see obvious reversal. No sense getting out of a winner.

 

If there is an obvious reversal signal , you get out of the full position not part.

 

According to your argument, why wouldn't you take the largest statistical move the instrument has ever made and use that as a price target? Your math is correct in that if the price target actually has ANY chance of occuring at all, it's best to hold full size to that. How do you know that ahead of time however?

TNG

 

same as with a scaled out trade

 

If that was your price target and the expectancy was sufficient, it would make sense. If the expectancy is better with overall profit at a lesser price, then that would make sense. Each trader must do this homework .

 

Getting out of the full position is not the same as scaling out. If there was an obvious reversal signal why would you leave some on?