IN trading, what one believes really is immaterial....
in trading, what a trader believes really is practically immaterial. do we not trade, long or short, according to our trading plans and preferential setups that have been proven successful over months and years of toil and labor?
and i also believe in scaling but scaling most probably won't apply to 80% of traders currently on board here. it is practically pointless and is even probably detrimental to learn how to scale if you have not proven to yourself that you can trade profitably and consistently over a period of time.
naturally, as jedi pointed out the rewards could be substantial, however on the flip side, your resources could be taxed to the maximum as well, if suddenly the market would stop rolling as you predict that it would continue to roll in your favor.
mostly speaking to myself, traders who scale, do so STRICTLY according to their own already proven setups and patterns.... there is no IFs or BUTs or MAYBEs or I THINK I WOULD or I THINK I WON'T....
anytime that i am wavering, not quite sure, not quite convinced and not quite ready to pull the trigger.... i would mostly just continue to sit on my itchy fingers and continue to wait and wait and wait.... those proper setups and patterns might not appear for hours or days.... it won't bother me one bit. i would focus on trading on the other 3 setups which appear more often and daily, which naturally also provide a bulk of the bread and butter, so to speak.
personally, when scaling in and out, i would only scale in when at least 3 of the 4 indicators agree on a confirmed trend, up or down. and when all four would agree on the same direction, i could be more than 85% certain that the resultant outcomes would be most satisfying and enriching. incidentally, i am still a chicken at heart, i would immediately scale out one-half to protect my profitable positions, just as soon as the median indicator shows sign of weakening. do not wish to bore many of you any further with my rambling.
yes, it is fun and exciting to learn to scale, but it is purportedly best to leave it until you have proven to yourself that you can handle it and that you are ready for it; and, more importantly, that you are anxious and eager to move to the next trading level where you might incur maximum adverse excursion in any given day. but you probably won't, because if you are an irrational, erratic, and whimsical trader to begin with, you most probably won't be here long enough to enjoy the satisfaction of trading at this level. wishing you and yours a very merry christmas and a very prosperous new year as well. according to the chinese calendar, the coming year is the year of the DRAGON, if any of your offsprings is born in 2012, they are destined to rule the world, so to speak....; well, well, well.... let's get busy shall we....
Last edited by nakachalet; December 12th, 2011 at 02:24 PM.
The following 3 users say Thank You to nakachalet for this post:
"mostly speaking to myself, traders who scale, do so STRICTLY according to their own already proven setups and patterns.... there is no IFs or BUTs or MAYBEs or I THINK I WOULD or I THINK I WON'T.... "
Y, scaling is not to save a loss but to give your directional bias an opportunity to materialize within a range before your bias is proven wrong. This can be a game changer if your method is sound. I know this won't be popular but I like the idea of pyramiding into a position but unfortunately it takes size to do it right so your stop is not too tight to your last entry.. If you double every time from 1/2/6 for a total of 9 in full position, your stop is always 6 ticks behind your latest entry.. At 9 contracts, you can then drop 3 at around 3 pts up to lock in some profits and move stop to BE.. with 6 still to ride to profit always with the intention of riding 6, so if price returns to your latest entry, you'll re-enter those 3 contracts again.. If you never got full size, you then hold what you do have to target.. If you scaled in 3 times with only 1 contract, locking in 2-3 pts scale out does not really have the same R/R..
My personal hang-up with scaling is that I really can't grasp how ones present win/loss total on a trade would, in any way, be indicative of the future direction of the instrument being traded. I just don't see the connection here.
It seems that the philosophy might be based upon the notion of "runners", which seems to insinuate free-roll betting with "house money". Well, even I have enough sense to know that there is no such thing as "house money" and that any amount you are ahead in a trade is "your money" -- regardless of whether you have closed it out or not.
Afterall, at any given moment during a trade, there is only one correct decision to make. Close or hold. Unfortunately, we only know which decision was correct after the fact. But I don't believe that it's posible to 'money manage' ones way to this correct decision. If the market doesn't take our W/L total on a trade into consideration when deciding it's next tick, then why should we base our decisions on this? There just seems to be no connection here.
But as a girl, I reserve the right to change my mind
The following 2 users say Thank You to Paige for this post:
Much of it depends on how you trade. If you're a scalper, scaling in and out does not make a lot of sense because your method will likely give you buy/sell signals very fast. However, if you're looking for a directional move, scaling in allows you the breathing room for your trade to materialize. Scaling in 3 times in a 3-4 point range means the trade will have to go against you for 4-5 pts before you're fully stopped out on your full position. If that happened, you're definitely wrong in your directional bias.. Hopefully, you will see something that will tip you off and deter you from adding your final big position.. However, if you bias was still intact and you got full position, its likely at a very good location and cost basis to give your idea a chance. You can also adjust the scale method according to market conditions to widen and narrow to optimize, and you can do the same with the exits.. I consider this an odds enhancer, given you already have a sound methodology.
If all fails, use the force..
The following user says Thank You to Jedi for this post:
did not mean to teach anyone or step on anyone else big toe, but i do like to show you something and ask for your personal opinion, if and when you have something as shown in the following pix; what would you do?
if you are able to, willing to and ready to.... add or closeout out more than one position.... would you just let your winning 1 trade ride the wave down....
or would you, according to your personal trading PLANS and STRATETIES.... quickly scaling in; as the screen reveals itself; as what is shown in the pix....?
did not mean to suggest, argue or quarrel with you or many other traders who are even more astute in trading than my humble self, K?
the following pix are taken live as the trade progressed:
pix 01, today's gc chart from about 11:30 till about 14:25 showing two lines, the white was crossing up and then down over the red and kept on descending for about one and one half hour....;
if you are able, willing and ready, would you just sit and watch and be content with i short position.... or would you do something to enrich your position with less than, guessing, 30% risk involved....?
pix 02, same gc chart, same time frame; also showing red rectangular inside two black rectangulars which to myself means, most often and most probably, the price direction during the next few moments, was heading south....; again, if you are willing, able and ready, what would you rather do?
pix 03, showing the price action, the funny looking rectangulars and the crossing of the white and red lines....; all agreeing that, most probably and most likely, the bulls would continue to lose ground.... what would you do?
am not trying to convince anyone to do anything or claim anything, ok?
just thought that perhaps if you are privy to something that does not appear in the mainstream, you would be vigorously encouraged to explore deeper without having to settle on the ordinaries, K?
paign: are you still of the same opinion that: ....Afterall, at any given moment during a trade, there is only one correct decision to make. Close or hold....
cold it be now that there could very possibly be optionally another third consideration: nakachalet's scaling.... LOL?
wishing you and yours and also everyone, an extraordinary christmas and most prosperous new year.
may your trading also be richly rewarded as well.
Last edited by nakachalet; December 13th, 2011 at 03:55 PM.
The following user says Thank You to nakachalet for this post:
I am (embarrassingly) baffled by your question at this moment. I'll need to think about it for a while.
I really don't know what I am doing and I'm here to learn and ask questions. As I surf for advice on trading around the net, I keep running into accepted philosophies and 'common wisdom' that I don't (at least at first glance) agree with.
For now, (and I don't know if this applies to your question), I'm skeptical of the notion that the odds of winning/losing on a trade increase/decrease --- just because time and/or trading action has taken place.
When I was just a small child, I remember my dad arguing with several of his friends for weeks about a controversial question in the newspaper to "Ask Marilyn". When I was in high school he explained the question to me. It was something like this:
The "Grand Prize" is behind one of three doors. You guess door #3. Now door #2 opens and the contents are revealed. It's NOT the 'Grand Prize'. You are now given the option to switch doors. Is switching your best play?
The answer (although quite controversial) was YES -- you should switch doors! The logic was that just because more information was known -- it did not change the fact taht when you made your original guess --- the house had 2 chances to win and you had only one. Thus, you were much better off switching and playing the door that originally belonged to the house because it was guaranteed to win two out of three times.
I realize there is a difference because in trading the potential gain is not confined to a specific level/number and could possibly be infinte (at least in the case of a long pos). And that the more you stand to win -- the poorer the odds you can accept and still be profitable. But because the odds of some abberation or 'unusual event' taking place are so low at any given time -- it seems like leaving a contract as a 'runner' is the equivalent of playing the lottery. i.e. from a practical standpoint, it's impossible to play profitably.
The concept of scaling in (as opposed to scaling out) is not one that I have considered as of yet. So I haven't got any positive/negative feelings for it.
Wow, I can't believe that I've actually got the nerve to write my feelings to a bunch of experienced traders! Thank you so much for your responses.
PS: I'll respond to PM's when I can get few minutes of free time.
I can't comment on the post you were answering, since I did not quite understand it, and I did not see any price action in the attached pictures, so I'm not entirely sure what the poster was trying to convey. But, I want to say, there are differing views for and against methods that add on to losers, add on to winners, scale in and scale out of trades. You'll have to do some searching around this site and elsewhere for discussions on the merits of each side.
attached pix is to provide further detail to explain prior 3 pix.
hope this helps some. cheers.
perhaps, it is also better to point out that the white dotted lines symbolically resemble actual price action in its purer form smoothing out for better visualization and decision making which other traders might find it entirely irrelevant at best, which is also perfectly alright with me, K?
and the crunched up different color batches appearing at the bottom of pix 2, 3 and 4 are what most eager traders might call--holy grail which is not intended for prime time show.... LOL
cheers everyone and have a very profitable trading session today.
Last edited by nakachalet; December 14th, 2011 at 10:25 AM.
Sorry for sounding so confusing. The point I was trying to make was that I'm not sure that I should second-guess an entry (or trade plan) once I have entered. I'm not sure that just because I am privilege to post-entry price action, that this knowlege can be of any positive benefit to me.
Assuming that I originally entered a position using a set-up and exit plan that (I have deemed to have) a positive expectation, it would seem that scaling-out would be the equivalent second-guessing.
I know, I know. I'm doing a horrible job of explaining my feelings on this. That's why I used the 'Ask Marilyn" example. Because I can't figure out how/if the odds on a trade change just because I am in it. And if the odds do not change from the point I entered -- then how can altering my strategy (scaling-out) possibly be anything other than a weak, second-guessing play?
To me, leaving "Runners" seems like gambling. And gambling, to me, is playing something that has a negative expectation over the long run. And I would be guaranteed to eventually go broke playing such things.
I'll admit that trying for the 'Big Hit' is incredibly romantic and enticing (likely even to top-notch traders). Might this be the single biggest reason that some of us are ever allowed to make a dime!
"Oh, if I could only have had at least one contract left when that huge move happed shortly after I closed my entire position......."
Might this very type of thought be the poison candy that is so difficult to resist that it either kills most traders or at least serves to drag-down their returns over the course of their trading careers? The forbidden fruit? Something to break the monotony of doing things right and simply making money.
I don't know any answers. Only questions and an ever evolving opinion.
The following user says Thank You to Paige for this post: