Scaling In and/or Out

[Dogpile]

just thought I would add my current thinking:

I do like going in on 2 trades rather than 1 --- scaling in...

I always use 'buy-market'/'sell-market' on stops for ENTRY (sends a market order if it trades at my 'trigger price').... so this makes this clean when your order is sent during a buy or sell program that is executing. 'joining in' on this with a stop-market is a beautiful thing..... I am generally playing for a profit goal of just a few points...

so for example,

say I have staggered 2 different 'short-market' orders on NQ at 1960.00 and 1959.00... say they are each for 5 contracts each...

now the market fills the first one at 1960.00 -- I instantly put a 'buy to cover' limit order for 5 contracts at 1957.50. why?

because it will fill my other order at 1959.00 and give me 'exposure' of 10 contracts at that point. I will be averaged in at 59.50 and general scalping target is 3 points (1956.50)...

so my real risk is that the market fills all my orders and instantly reverses between 57.50 and 59.00...

if my first order is a bad trade, I am somewhat unlikely to fill on the 2nd part of the order without also filling the buytocover limit order given the small distance from the 2nd entry to the first exit point.

if my order is a good trade, I will fill on both and might make my first profit within a minute or two of the second entry... this fill reduces risk exponentially.

many times, I will take my second position and manage the exit on a discretionary basis. I might watch the first push and move down my stop to the top of the 3-minute bar that the entry triggered. good trades tend to work right away while bad trades tend to reverse right away --- so I have found this to be effective. your worst analysis of the market will tend to fill only on the first order.

one other scaling in method is simply using signals that are similar but on different contracts (ie YM)-- and use a similar style to exit... get out of the first entry relatively quickly after the second entry 'triggers'...

futures have so much leverage that it is important to control your risk tightly... I find that having multiple orders out (say 4 orders across 2 different contracts) is a really nice way to control risk when you begin trading bigger size and the dollar values get big... you only need a couple of points a day with size to make a living...

[BlowFish]

Hows this for a technique :- lets assume the Russel is in a reasonable tight range and you are anticipating a move down out of it.

Sell 2 units at the top of the range and cover 1 at the bottom lets say at +1.2 for arguments sake Move stop to -1. If price approaches the top of the range sell 2 more and rinse and repeat.

I have not used this technique for a while but it is possible to build a large multiple position that is essentially risk free (if you count the whole exercise as a single trade). long tight boxy ranges are good for this.