One of the aspects I enjoy w/ ET is being exposed to the myriad ways that different traders exploit the mkt for profit - bordering on mind-boggling when you think about it.... Also interesting is that, frequently, along with all of those approaches comes an incredible intolerance for those other approaches...
I continue to rebut B1S2's (admitted) assertions simply because I wouldn't want beginners around here to get the idea that if they find success by scaling out, they are somehow wrong and must change their behaviour. This is a crock. Yes, the thread title is fallacious at best. I believe that it is simply that and not more sinister.
Once in a while a few angels appear in our lives. I've had one already appear years back and recently a new one (Buy1Sell2). For those willing and fortunate enough to understand and read into what was taught here and in other forums , you are onto prosperous paths. It can be proven, it is all mathematical and quantifiable.
Many traders, including I...have a decisive rule set to achieve profits via scaling out. Just as important as mentioned many times in this thread... Most traders that scale out of positions also exit all at the same time when market conditions merits such. Simply, it doesn't matter if you EXIT ALL or SCALE OUT or SCALE IN or ENTER ALL... You can do such via decisive rule sets as you refer to. As I said before, there really is not right or wrong way about exiting all or scaling out especially when you have traders doing both very effeciently or doing one more efficiently than the other. The behavior when most traders have real money on the line is that when they EXIT ALL at some profit target... The trade is over with and if a new trade is initiated, it's often via a different reason in comparison to the prior trade entry. Further, the reality is that most (not all) traders that EXIT ALL will not adjust their profit target to a bigger profit target when market conditions change in favor of such. That's a behavior that can't be overlook unless you only want to talk about theory. In contract, and in reality when a trader SCALES OUT...its most likely because the trader has recognize that market conditions has changed and decides to get greedy while wanting to ensure there's a profit via exiting a portion of the position at the original profit target. Simply, this thread shows (arguably) via math its best to EXIT ALL. However, in reality (there's a few old journals as fact to this)...two traders using the same method with the same initial profit targets... The trader that scales out will do so ONLY when market conditions merits for such. Simply, traders that scale out also EXIT ALL when market conditions merits such. Therefore, real behaviors is much different than mathematical theories. Reason why backtesting results are different to real trading results... Something many newbie traders find out the hard way. Also, I've actually study different traders using the same strategy (entry rules) while some scaled out when merited while others didn't scale out. The traders that scaled out performed better. Reality...not theory. However, if neither used a good rule based method for such... Both underperformed in comparison to those that used a good rule based method for such. Summary: * Scaling Out is an inferior behavior only when market conditions merits exiting the entire position at the same time. * Exiting ALL is an inferior behavior only when market conditions merits scaling out the position at new profit targets. Once again, both of the above can be managed via a decisive rule set. Mark
Mark- Are these a boundary of market "conditions" or explicit rules? Conditions don't portray decisiveness to me.
Conditions to me are : The market is bullish. The DOW is up 200 points. The tick and tack are at extremes. The DAX is bullish. The SOX is smelly to me. and so on. Rules: B is greater than A and C is less than A. Trade with the rules, ignore the conditions.
Explicit rules for both...exiting all and scaling out. Simply, market conditions determines which explicit rules set to use (exiting all or scaling out). However, market conditions or what qualifies for such has a different definition from one trader to the next. Therefore, your examples of market conditions are not conditions to me. Thus, your descriptions seem like general statements you may here on a financial TV channel by a market journalist. Mark
It is no mathematical fact.It is your opinion.I have asked you repeatedly for some trading rules to apply your definitive rule,and all you can come up with is bullshit statements like "its a mathematical fact".Remember you are the same person who admitted that you once believed scaling in was the "proper way to trade"...Was that a mathematical fact as well,until you changed your stance?? Like him or not,Dan Zanger scales out and as far as I know,nobody has put up the type of numbers he has......Interestingly enough,he doesnt state scaling out is the proper method of exiting a position yet you seem to have discovered the golden rule of exiting.