The benefit from scale in is not that you enter with half position and get a second half in at worse price but that you can double or more your position without adding more risk. Not two at once or one after another, but two at once or two after two.
I agree that scale out is not beneficial in terms of end return. But if you limit your drawdown or number of losses anyhow it might be the only thing to keep it working. Scale in is the opposite, its hard since you increase risk but it impoves the end result.
Yes this is part of what i've been trying to understand. Because no matter how I look at it, scaling in is actually just another trade with it's own set of criteria. The fact that you happened to already be in a position doesn't change the fact that at the point of adding more,..that is a new trade.
So the only real benefit I can see for adopting a scale in strategy is to have minimal initial risk, and then once some profit has been built up, add more with the risk for that portion being mitigated by the profits from whatever is already in the market. But again,...the scale in is a new trade with it's own set of criteria.
You donít trade the markets; you only trade your beliefs about the markets.
- Van K Tharp
Exactly. Hence you need another setup. Exception is momentum trades. But continuation of a move can be a setup in itself. Or trend trades with entries off fast emas are good option for scaling in. A variation of momentum trade
There are no exceptions. Its wrong, wrong, wrong.
Diversification is the Holy Grail of trading, but scaling is the worst diversification of all.
In scaling in you have same PT and same SL. In scaling out you have same Entry and same SL.
If we agree that scaling is another trade, than by scaling you actually saying: I'm such a good trader that I never invent one setup at a time. I invent them in pairs or triples.
When pro's do it for the reasons I mentioned in my earlier post they are also frequently up-scaling time-frames, i.e. what was a scalp has become a comfortable day-trade, or a day-trade has become a comfortable overnight hold or longer term swing. They are also doing it because the good ones are on the right side of a squeeze and can kill retail or institutions that are scrambling to get out on the other side.
As I said before, they are not inventing multiple setups they are simply spotting and taking new setups once existing ones are already safely in profit with b/e or better stops.
Don't confuse the fact that it is hard for us to do with the opinion that it must therefore be wrong.
That's my 2c anyway.
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I think you are missing a point of scale ins. If you risk say 10 ticks and go for 50, you can easily get another setups by the way to target when you original entry is protected. So it is only sensible to add to position there and place a stop on a new position as per strategy. Scaling in even more important for momentum strategies.