One more excellent thread on a similar topic:

Who makes more money. Scalpers or Point Traders Ok dont want to over complicate this question, assume trader is profitable and manages Risk to Reward etc, we all know a scalper is usually 1to1 or 2to1, guys trading bigger time frames are 1to3 or 1to4. Only referring to day traders not holding for days, …

Enjoy

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In the case of a losing trade there are a lot of valid arguments made by previous traders not to scale-in and cut your losses. For me the most important one is that your capital and time are all focussed in one trade.

But on the other hand how many times did you get stopped out when discovering the market is going your way after all. Just the noisiness of the market.

So if you know the mean reverting characteristics of the instrument your trading and if there still is an opportunity in higher time frame then I will choose to manage my losing trade as long as higher time frame allows me.

My initial position is small so I'm less triggered by fear. Let's say 1/3th of your normal position, that gives you 3 retries at significant levels at a better price. If that didn't work out, ok, then you can take a loss knowing your were wrong, and it was not due to some nose.


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As with all trading issues and questions, there's no right/wrong answer. Scaling into a negative position takes not only guts, but equity, but it often times is the best solution, in retrospect. Scaling into a winning position takes less guts and you're using house money! The primary issue is "how comfortable am I in giving up profits (multiple lots help here). The first rule of trading that we learn is "let your winners run." Here's where Al Brooks' 80/20 rule comes into play. (4 out of 5 days are reversal days, 1 out of 5 is a trend day). If you can differentiate between them accurately, then scaling produces (much) larger profits. Need only to look back to yesterday (DJI - 700) for proof. NKD opened HOD and produced a one lot 22K short winner; the other guys YM, ES followed suit on the NY open. Great "opportunity cost" to not scaling in yesterday, i.e, take the rest of the week off and head for Maui, since we'll revert back to reversal days to end the week.
To me, scaling is the essence of trading. It's what demo accounts were made for.

Most of the time I cut the loser and re-enter at a better price. The trade usually goes my way and the win makes up for the initial loss.
EDIT - I say the trade usually goes my way because my winning % is usually 70% +/- 5% with an R/R around 2 +/- .5

Was a good read, for my bot, it's a "one position/all in" strategy
But for manual trades, if the setup looks like it could hit a wider range of pricing I will have set entry points.
As someone else stated, sometimes I will play both the breakout and retracement, in case the market doesn't come back, or in case it does. Try and hit both systems.

Hi guys,

I just want to say, I do trade a style similar to this, except that I realized that since it requires the trader to be able to differentiate between miss timed trade vs trading against the trend, I added an extra strategy of spreading the position out in highly correlated markets, in case of futures, it can be spot Vs forwards for Forex.

The real catch is the market's volatility, portfolio's volatility and position size and hedging/spreading orders.

I scale-in, and I scale-out. This is a mean-reversion thing in my case, scaling into longs where I think there 'should be support' (into shorts where I perceive resistance), and scaling-out as the trade moves my way in order to monetize the trade and lessen risk if the trade subsequently reverses against me (well, it always does eventually...).

This is ALWAYS 'part of the plan', working orders at an AREA that I'm interested in establishing a position. Because 'areas' are by definition NOT an exact, specific price, I place my orders a bit in-front of the area (in case we don't quite get there), and then 'thru' the area (in case we trade thru it a bit, but it 'essentially holds the wiggle room').

If I LIKE AN AREA, I WANT TO BE ON A TRADE there. How am I supposed to know, in advance, where exactly we'll 'reverse' into my expected 'reversion'? I can't know, and if I don't spread the orders a bit I may never get filled and then miss out on the trade. If I 'wait to see what happens', its almost always 'too late' and chasing an entry leads to losses for me.

What if it all goes to shit and slices right thru my 'area'? Well then I'm wrong, and exit.

So many ways to skin a cat, this is just my way of trading expected reversion. I settled on this method ~10 yrs ago and I find I continue to have better success w/ this than attempting to 'catch trends' AFTER they're established.

My 'method' gives me pretty good trade location when I'm lucky enough to be right, and THEN I can manage the trade if it 'trends', adjusting scale-outs if necessary.

BUT FIRST I GOTTA GET ON THE TRADE, and this is the only way that has worked for me.