[maildigger]

Assume you trade a 10-lot. Will you scale out? Why (not)? Is scaling based on the fear to loose once you have a profitable position? Why won't you wait untill the target is hit? Is it inferior human behaviour?

[Soultrader]

I tend to scale out on all my trades. This is the only way for me to be able to ride out my positions on a winner on a intraday trade. I dont think I can sit tight on a 100pt YM rallly without scaling out at least a portion.

[maildigger]

I noticed a higher % winners but an overal reduced p/l in the long run when scaling out.

[Hlm]

Originally Posted by maildigger »

Assume you trade a 10-lot. Will you scale out? Why (not)? Is scaling based on the fear to loose once you have a profitable position? Why won't you wait untill the target is hit? Is it inferior human behaviour?

I wait until my target is hit, but I have more than one. Your "target" has a certain probability of being hit (being known or unknown to you). It's amazing to watch newer traders just throw targets out there off the top of their head. There is no "one rule" for what your target(s) should be. It depends on your system/setup and risk tolerance. I take partial positions off at the higher probability targets so I can concentrate on reading the markets for the lower probability ones. For me, it's not so much about fear but more on the simple concept of capital conservation. In order to be a successful trader you MUST make money. It's very black and white (or red and green ). Remember, psychology is a BIG part of trading and scaling out (depending on your system of course) can help a lot in certain situations.

Just like picking your targets for all in and all out...you can pick wrong scale-out areas that WILL lower your PnL some. It's easy to look back and say "if only I didn't scale out". However, if you didn't scale out and take a small win on that trade would you have had the ability to jump right back in for that next trade? It's a big mind game and visually backtesting your PnL can give you false perceptions.

[brownsfan019]

I never found much value in scaling in or out. No matter how many times I crunch the numbers, scaling out just doesn't work for me as digger said.

[Jakew]

I don't scale out. Psychologically this technique can be comfortable for some traders ("I secured some profit and now can go for a home run with the rest of contracts") and uncomfortable for others ("Why did I cut my size down, I would have earned so much more"). Mathematically, for lack of anything effective coming from my own research, I would opt for Tharp's standpoint which is "full position from start to finish, otherwise you cut your profits short". It is so much simpler... But there are top traders who do scale out so I quess they do not do that for psychic comfort only...

[Trvlwanderer]

Originally Posted by Hlm »

I wait until my target is hit, but I have more than one. Your "target" has a certain probability of being hit (being known or unknown to you). It's amazing to watch newer traders just throw targets out there off the top of their head. There is no "one rule" for what your target(s) should be. It depends on your system/setup and risk tolerance. I take partial positions off at the higher probability targets so I can concentrate on reading the markets for the lower probability ones. For me, it's not so much about fear but more on the simple concept of capital conservation. In order to be a successful trader you MUST make money. It's very black and white (or red and green ). Remember, psychology is a BIG part of trading and scaling out (depending on your system of course) can help a lot in certain situations.

Just like picking your targets for all in and all out...you can pick wrong scale-out areas that WILL lower your PnL some. It's easy to look back and say "if only I didn't scale out". However, if you didn't scale out and take a small win on that trade would you have had the ability to jump right back in for that next trade? It's a big mind game and visually backtesting your PnL can give you false perceptions.

This is a very good post from the "psych" aspect. True in all regards.

[jhellie_baby]

Basically, I think scaling out is necessary when it comes to trading. Of course no one wants to lose their money on trading. You will be bankrupt if you do so. So before starting on any trades, I think everything over.