|
Re: Risk/reward in the Long Run ...
If you're talking about scaling out, then yes, there are disadvantages but for some, the need for instant gratification is still uncontrollable so by taking off a 1/4, 1/3, etc. to make him feel better and let the rest run. At least he's more of less breaking even if the rest don't pan out. Sometimes, meeting a resistance/support zone with full position can be somewhat risky if prices reverses and runs away. Just saying, taking some profits and let the rest ride wouldn't be a bad option is all. I do it but I do it scaling in a well. I'm speaking of scaling in when the market goes my way, not averaging down.
I think the problem with new traders is that they tend to take profits too fast , usually the entire position and miss out on the rest of the trend. I think this is a best progressive way to encourage them to stay in a position longer when the trend is going their way and learn from "holding when you're right". I, for one, get more aggressive when the market tells me I'm right, I'll pile in.
|