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Scaling: In/Out. Winning/Losing

  • #21
  • Oct 2, 2007 1:12am Oct 2, 2007 1:12am
making scalping to longer time frame trade? win, and we shall see the way.

oh wait, by looking at the name, "a Scalp becoming a swing and then becoming a Position."
does it at first not intended for longer time frame but then it is? if that so than we can see that the position get 3 entry confirmation with same direction even before it get a chance to get out. rare indeed.

but there is unintended longer time frame trading which often called as "holding your loss" since most claim that their account blown because of it, we may consider it very effective and may only need to reverse some detail to make it on the profit side.
  • #22
  • Oct 2, 2007 4:06pm Oct 2, 2007 4:06pm
A couple years ago I read something by Linda Raschke about entering a market (stocks) while it's trending on a short time frame like 15 min. It went something like.. if the market has just reversed and is trending up then buy just after the first peak or pivot. This will get you accustomed to experiencing the draw down which happens in most trades anyway. When you see the trend resume then add to it.

"Ya right!", I said at first, but recently I'm beginning to see the wisdom of her suggestion. If a trade must always go in your favor soon after you enter it for you to be willing to stay in it, then you will likely bail out too soon and too often in most of your trades. By expecting the trade to go against you in the beginning it takes much pressure off you and you become more willing to wait it out through the rough areas of your trades. This is even more important on longer time frames.

With that in mind, I realized recently that many of my most successfull trades were handled like a chess match and in a maner suggested by Linda R. I was willing and even expected to lose a pawn or two early on, but in the back of my mind I was thinking in longer term goals and trying to force the market into a corner where I could unleash my knights to finish the job. At the same time I realized that my original assessment could be wrong and in some cases, I regret to say, I ended up losing the battle. Can you imagine that? But when things do go my way I make sure that I get a big fat chunk from the middle of the trend.
  • #23
  • Oct 2, 2007 4:38pm Oct 2, 2007 4:38pm
"Scaling" is not a trading strategy. This term may include almost any trade or a trading plan with more than a single position on the same currency. As always, the devil would be in the details.
  • #24
  • Oct 2, 2007 5:08pm Oct 2, 2007 5:08pm
Quoting Igrok
"Scaling" is not a trading strategy. This term may include almost any trade or a trading plan with more than a single position on the same currency. As always, the devil would be in the details.
Scaling is NOT a trading strategy?
http://www.investopedia.com/articles.../ScalingUp.asp
  • #25
  • Oct 2, 2007 5:17pm Oct 2, 2007 5:17pm
I guess scaling is more of a money management technique than a trading strategy, but then a complete trading strategy includes a good money management technique, so go figure.
You can quit and they won't care, but you will always know.
  • #26
  • Oct 2, 2007 5:29pm Oct 2, 2007 5:29pm
Quoting Micro-MiniMe
Scaling is NOT a trading strategy?
http://www.investopedia.com/articles.../ScalingUp.asp
Come on, get serious. Use your own brains rather than looking for "authorities" like that. "Scaling" is just a term that includes adding more positions to the initial one. It doesn't say neither "when", nor "where", nor "how", nor "how much", while those are the key issues for any practical trading strategy.
  • #27
  • Oct 2, 2007 5:39pm Oct 2, 2007 5:39pm
Quoting Igrok
Come on, get serious. Use your own brains rather than looking for "authorities" like that. "Scaling" is just a term that includes adding more positions to the initial one. It doesn't say neither "when", nor "where", nor "how", nor "how much", while those are the key issues for any practical trading strategy.
I would paste in the definition of "strategy" but it's listed in one of those stupid authority type books that we call the dictionary.

If you add to a position in a pre-planned sequence how can that be dismissed as not being part of a strategy?
  • #28
  • Oct 2, 2007 5:43pm Oct 2, 2007 5:43pm
Quoting Micro-MiniMe
In the words of the great Isotonic "Would someone please unvouch me, now?"
Can I?
Mr. Trend
  • #29
  • Oct 2, 2007 5:46pm Oct 2, 2007 5:46pm
I am a huge proponent of scaling in. Scaling in, IMO, is really based on your strategy. I only scale in on my long term trades where I plan to hold it for awhile (as is the case with EUR)...

Scaling in is acting when the market is proving your edge correct...it's an artform, because if you scale in too quickly, you will not be able to accept the risk if the position goes against you. On the other side of the coin, if you don't scale in at the right times on the way up, you miss out on good timing and getting the most that you can as you compound on up...

It's a balancing act. You really need to have a good plan with defined criteria of where and how you'll scale-in...

Once you've mastered that, you'll make stacks of cash.
Mr. Trend
  • #30
  • Oct 2, 2007 5:50pm Oct 2, 2007 5:50pm
Now... regarding scaling out -- I have created systems that scale out versus those that don't.

The interesting thing is that the ones that do scale out, make almost the same amount of money, but with reduced risk...

Most traders like to scale out, because you'll find that when you talk to them, they can't handle the additional risk as they add more and more. It's a very individualistic thing.
Mr. Trend
  • #31
  • Oct 2, 2007 5:59pm Oct 2, 2007 5:59pm
Quoting philmcgrew
I would paste in the definition of "strategy" but it's listed in one of those stupid authority type books that we call the dictionary.

If you add to a position in a pre-planned sequence how can that be dismissed as not being part of a strategy?
I just said that the term "scaling" is too wide to be considered as a "strategy". Besides, you never know in advance whether you will be able to apply it or not. For example, if you're planning to use "scaling out" but the market goes your way right after the initial position was open, then your trading plan has to be reconsidered and only "scaling in" might make sense in this case. There are millions of possible ways to use scaling. Some strategies may include adding new positions on the breaks of the key levels, some may use potential retracements inside the trend, others could be a combination of all of the above. Generally speaking, the term means only one certain thing: It is about having multiple positions on the same market symbol.
  • #32
  • Oct 2, 2007 6:01pm Oct 2, 2007 6:01pm
Quoting Mr Trend
The interesting thing is that the ones that do scale out, make almost the same amount of money, but with reduced risk...
I am not a fan of scaling out but do like to reduce risk. Can you explain how that would work as compared to a trade with no scaling?
  • #33
  • Oct 2, 2007 6:11pm Oct 2, 2007 6:11pm
For me more simple implies more sucessfull, when you develop too complicated systems is hard to see what is wrong when it fall, in other hand for my own experience I can tell you that when the positions are bigger, traders like to use low (very low) leverage and put the position based on fundamentals no matter what can say tech analisys, and put one big position for a long time, that reduce the operations cost
  • #34
  • Oct 2, 2007 6:11pm Oct 2, 2007 6:11pm
Quoting philmcgrew
I am not a fan of scaling out but do like to reduce risk. Can you explain how that would work as compared to a trade with no scaling?
It's a strategy thing. You need to test it in your strategy to see if it works.

I was working on one, one time when I was programming in TS and it would scale out 50%, and I noticed that it would scale out, continue going in my direction, and then reverse and my exit criteria kicked in...it always seemed like the timeframe I was in and the timing of the scale out coincided often with reversals (and subsequent exits) in price.

That's why you'd make the same or close to, the same amount of money.

It's just a tool to use in a strategy. I view scaling in and out as a management tool, and I don't consider it as part of the original rules of the system. It's more of a, "Well, if I scale out will I make the same? Yes... GREAT, I just reduced my risk! No... then scrap it."

"Will scaling in make me more money in this edge? Yes.. GREAT... Am I willing to accept that risk and how much heat do I generally take before I start sweating on this increased risk? Too much? Ok, then scrap it..."

That's basically my strategy creation thought process.
Mr. Trend
  • #35
  • Oct 12, 2007 11:29am Oct 12, 2007 11:29am
Quoting WTB
Regarding the scaling out discussion, whenever I enter off a pullback in a trend I like to scale half of my position out few pips before reaching the previous swing high in case the chart unfolds as a double top/bottom.
I concur! wise strategy
100% of traders are losers. Just that some win more than they lose!
  • #36
  • Oct 12, 2007 12:18pm Oct 12, 2007 12:18pm
not.
https://linktr.ee/Soultrader
  • #37
  • Oct 12, 2007 12:59pm Oct 12, 2007 12:59pm
Quoting WTB
Regarding the scaling out discussion, whenever I enter off a pullback in a trend I like to scale half of my position out few pips before reaching the previous swing high in case the chart unfolds as a double top/bottom.
I don't get this either. You are self-admittedly in a trend. When in a trend the previous swing high is supposed to be broken. That's what makes it a trend in the first place. Why would you sacrifice to opportunity to double your profit by not taking off 50% of your position? Does the fear of hitting a double top and being wrong outweigh the entire reason we trade a trend in the first place?

I'm glad this thread is coming back to life. It is such an important topic.
  • #38
  • Oct 13, 2007 9:05am Oct 13, 2007 9:05am
I do not seek to exploit the whole trend in one trade. I like to treat each consecutive swing as an entire different opportunity, and thus I manage my positions as per the swing in itself, not as per the trend as a whole.
  • #39
  • Oct 13, 2007 9:23am Oct 13, 2007 9:23am
Quoting WTB
I do not seek to exploit the whole trend in one trade. I like to treat each consecutive swing as an entire different opportunity, and thus I manage my positions as per the swing in itself, not as per the trend as a whole.
Interesting. If that's the case why do you hold the remaining half of your position and when do you exit that?
  • #40
  • Oct 13, 2007 9:28am Oct 13, 2007 9:28am
I hold the second half to what I consider might be the full potential projection for the swing using exaustion tools such as ATR, fib projections, S/R levels, etc.
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