yes but everyone is different with a different personality,if we where all the same it would be a dreadful place to live.i also come across hard sometimes but i love to help people it is the one thing i enjoy more than anything else,good trading and merry Christmas everyone...sharky
A comment that you made a while back seemed to suggest that you opined that 'Scaling Out" of trades was beneficial. Is this your opinion and how you trade?
I've done some searching on this subject recently and it seems to be a rather controversial subject.
Any strong opinions on this subject here on this thread? (sorry, I couldn't easilly find a debate on this subject within the search engine here)
I tend to NOT believe that the correct answer is simply that it is a matter of 'personal choice' or "psychologicaly benefecial" to many traders. I'm guessing that it is either a correct play or an incorrect one.
I happen to believe in both scaling in and scaling out if you're trading size. If you're trading small, I still like scaling in but scaling out seems less optimal due to R/R. Everytime you enter a trade, you're risking your stop so your reward needs to be attractive. I believe scaling in and scaling out is an edge enhancer but scaling out works best with some size to both lock in some profits but have enough to run to target. Scaling in because S/R is often a zone and not so precise. Scaling out to lock some in for assuming the risk. I'm still not where I want to be with my trade size for optimal scaling in and out. Once I get to 10-20 contracts, I believe my edge, R/R and ratios will be further enhanced.. I'm speaking for myself with ES as the instrument.
Last edited by Jedi; December 11th, 2011 at 11:50 PM.
What alot of traders like and feel comfortable doing is the strict rule based methodology of setups, trade size, entries and type of exits.
In the beginning, You almost have to define your rules very firmly in order to be able to measure consistency. And with consistency comes confidence which brings bigger size.
The problem is that the same rules you start out with can only go so far before you need to start slowly applying those rules in a more discretionary manner to eliminate the qualified setups that you now know, have a low probability of working. I like to explain things with examples (People relate to real world examples)
About your question of "should you scale out or all out at once"
Lets say the ES is up 10, an hour after the open. I see a flurry of panic buying and then it went a little higher and was met by by huge depth and it had a fast triple top and could not bust through. Lets say I got short 5 lots and now price has moved down some.
For me, the way I read it. If price was rejected by heavy depth, I know that the odds are very favorable for at least one retest. So I would be on the lookout for a smaller bout of panic selling to exit all at once.
The same setup above except this time the buyers ran out of gas and the depth was chasing lower. I usually wait for larger scale panic selling and sell half there and see how high the bounce and how it acts on the test.
I try not to give any advice that I dont use everyday.
Every time you look at the market, you have to put your mind on the guy on the other side of your trade.
I boils down to one thing, ARE YOU SELLING BECAUSE YOU HAVE TO, OR BECAUSE YOU WANT TO...
Here is a little nugget: What do most people look for, large size traders, volume spikes, volatility etc.
That is what I look for just in the alert phase. The real decision making time comes when you see just the opposite after the first. Every range has that one little tiny make or break balance point. That one point where the micro volatility is super low and vol is holding back for that one large order to run through and tip the scale.
I can never find that one point until I am in a trade, then I narrow it down to a few seconds, but its too late at that point, so thats why I bail out if I am not right. I am trying to be more patient and put on a pilot position so I can wait for the break to add, but I cant handle the stress of a larger stop.
( I am referring to more prominent highs and lows instead of midrange chop)
For me, every trade requires different position size and the way exits occur, change after each bar passes.
I like to look at the symmetry of moves to get a general feel of maybe what to expect.
Which ever side takes longer to retrace is usually the real direction. Think about the psychology behind a sharp fast move down and a slow rise back up. Which side would you say was more scared. The scared money never wins over the long term.
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"Which ever side takes longer to retrace is usually the real direction. Think about the psychology behind a sharp fast move down and a slow rise back up. Which side would you say was more scared. The scared money never wins over the long term."
Could you say a bit more about that Init? I would think that the slow choppy retrace is the one with less conviction and may have more scared money participants?
That is exactly what the market makes you think.
I am going to paste a story in here that I read that explains the market psychology beautifully.
Read it twice if you have to. It will explain a lot about price action and how to view it.
Trading on the BANDWAGON
Imagine a bandwagon that is rolling forward at a quickened pace. Music
that is very pleasing to the ear is being played from speakers on each side
of this bandwagon, and a few people currently on the back of the wagon
are partying, having the time of their lives. The music, loud and clear,
starts to attract many other onlookers that happen to be idly standing on
the sidelines. These onlookers, unable to resist the sweet sounds being
played, run to join the party that seems to be going on. Progressively,
more and more onlookers jump on the back of this bandwagon, and
those few who were initially enjoying the first phase of the party begin to
leave. As the crowd of new party animals on this bandwagon grows
larger, the bandwagon finds it harder and harder to move forward at the
same pace. It slows, enabling more and more late onlookers, witnessing
the great fun, the chance to jump on. The crowd grows even larger.
Larger and larger this crowd grows, until the bandwagon, heavily laden
with the bodies of drunken party animals, can no longer move forward.
It finally comes to a complete stop. Now that the bandwagon is at a com-
plete standstill, more people jump on. And why not? At this point, joining
the fun is easy. Absolutely no work is required, for individuals wanting
to join the crowd no longer have to run to jump on board. But the nature
of the bandwagon is to move forward. Its motionless state is unnatural,
and therefore cannot last. It tries to move forward again, but can’t. The
crowd, piled on back, is much too large. It must free itself of the heavy
burden. And it does. It quickly shifts into reverse, and jolts backward,
knocking a few of the party animals off the back. The music stops. Puz-
zled faces from the crowd begin to emerge. Before anyone figures out
what’s going on, another backward jerk takes place, only this one is more
violent. Another large group of people gets thrown off the back. Now, re-
ality sets in. The fun has turned into a nightmare of epic proportions, and
panic begins to run rampant. Some decide to jump to their deaths. An-
other thrust backwards sends an even larger group of drunken, off-
balance people, hurling to the muddy ground. It doesn’t stop. The jolts
backward continue, each successive one more violent than the last. At
this point, only a few die-hard wagon dwellers are holding on, their very
lives hanging in the balance by a very thin thread. Failing to be com-
pletely free, the bandwagon angrily puts the pedal to the metal, and this
final thrust backward is so vicious that its front wheels lift high off the
ground, momentarily suspending the wagon in a perpendicular posi-
tion. The last of the hangers-on crash to the ground, broken and maimed
to no end. At this point, a new group of onlookers emerge from the
nearby woods. They are clean and serene. Each movement they make is
deliberate and powerfully energetic, for they did not take part in the
tragedy that just transpired. Or did they? A few of the dejected souls ly-
ing on the ground take a closer look, a look that reveals something very
interesting. This seemingly new group is not new at all. It is the same
group that was seen quietly exiting the party before it came to its violent
end. An even closer examination by a few more beaten-down onlookers
reveals something even more stunning. This group not only exited the
party early, they were the originators of it! “My God,” someone exclaims.
Paralyzed, and unable to move freely, all these dejected souls can do is
watch, as the masters of the game go to work, again. No sooner does the
bandwagon’s wheels hit the ground than this professional platoon bolts
for the wagon. In a flash they are on board. Easy. The bandwagon, now
free of the larger crowd, can move forward freely and gracefully, com-
fortably carrying the more astute group with it. Its pace quickens, and
before long a smooth elegant stride is in place. After a few miles of unin-
terrupted movement, someone from this masterful group flips on a
switch, and suddenly the loud sounds of entertaining music start again.
Someone yells, “OK everyone. Here they come. Let’s do it again.” Within
moments, those who were the former victims of the backward crash be-
come interested again. The music almost calling them from the grave.
And once more, the never-ending cycle repeats.
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