Can't seem to Let the Winners run

[Jason101]

Ok...now be truthful here ok !
Forget the issue of running winners for a min. Do you find that you have the patience to wait for good set up entries ? If yes then how about doubling your initial stake...taking the momentum part and exiting half the position, allowing the remainder to be managed without the pressure.

Or even three positions and exiting 2 after momentum, so your worst case scenario is a good profit and not just a break even.

If you are going to use 3X the position size at the start, use a ROCK SOLID stop loss EVERY time.

I would NOT double or triple your entry position size unless you are really confident on the setup and it still adheres to the 2% or less rule of capital at risk for the trade based on where the stop loss is placed.

I used to have the same problem and have noticed that a EMA 13 and EMA 39 cross on the LOWEST time frame I look at has been a REALLY good sell signal for me. I usually trade using 3 time frames to corroborate my trade setup (usually weekly, daily, 60 min). So take a 13,39 EMA cross on the 60 min time frame. If you trade shorter time frames try it on the 15 min or 5 min time frame or whatever you use. It works really well and you stay in the short term trend until its no longer a short term trend. This simple rule has changed my trading tremendously.

Go back and look at the trade you did not reap as much profit as you wanted and see if this rule would have helped....I bet it would have made you more $$$.

Good Luck.

I don't see the connection between taking/exiting three positions and using 3x position size??

Telling people to ramp up size because they can't run winners is quite frankly idiotic. Those very same emotions which stop them maximising their winners will cause them to mess up their trade on 2/3 times their default clip, and the net result will be much, much worse! Horse manure advice. Nay.

I rather suspect that particular bit of "advice" was posted 4 lulz

What is the matter with this thread?

There is no connection with the amount risked per trade and scaling out your position. (Unless your gearing is so tight you cannot have multiple positions, in which case you probably should not be trading).

 

[Bint_Crusher]

High as a forken kite, hoping to graduate to spaceship soon.
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[eegozi]

What is the matter with this thread?

There is no connection with the amount risked per trade and scaling out your position. (Unless your gearing is so tight you cannot have multiple positions, in which case you probably should not be trading).

My point is NOT that the amount risked per trade (1R) has anything to do with scaling out of a position. My point is that the scaling out of a position dramatically effects your profit per trade and ultimately your expectancy of your system. Read what I wrote in the "How do you guys take Profits?" thread about this topic. (I will post it below for ease)

Reread my post and you see I am referring to risk and profit to help determine the BEST time to add to a position. You generally do NOT want to add to a winning position until you are solidly in the money on your trade,....so that if you get stopped out at a profit you dont STILL end up losing money. There are fewer things that were as frustrating to me than being RIGHT about a trade and STILL losing money. I did it numerous times and realized it was because I added to a position too soon.

Crunch the numbers yourself and you will see what I am talking about.

POST FROM OTHER THREAD BELOW:

Quote:
Originally Posted by leonarda
I suspect if you use scaling out also with scaling in, then you avert the problem barjon is referring to. Which sort of makes sense as symmetry is usually a good thing.

Posted by eegozi
Sorry,...but I think this plan is horrible!! I have tried. What happens is you increase your risk at a higher price and your average price goes up. Then when you scale out your average price of sale goes down. If you want to add to a position it should be about 0.5R position AFTER you have made about 2R. and moved your original position's stop to 1R gain or so. That way even if you lose on the 0.5R position you still have made 0.5R on the trade.

Lets say you buy at $100 with a stop at $99. Then you buy 100 shares for $100 at risk (1R). ONLY when you can move your stop to $101 should you risk an additional $50. I would do that when the price moves to $102 ($2 x 100 shares = $200 or 2R) and I buy 50 shares at $102 with a stop at $101 ($50 at risk = 0.5R). That way you have at least a $50 gain (0.5R) if the price moves against you to $101. On the original position you make $100 and on the second position you lose $50 for a total gain of $50 (0.5R)

Good Luck

 

[Jason101]

Eegozi, confusion in communication.

No, I completely agree with you. I grouped all posts on this topic together and especially yours because it stood out as someone saying - “and it still adheres to the 2% or less rule of capital at risk for the trade based on where the stop loss is placed.” Maybe I should have highlighted what you were saying. I was going on the assumption that anyone else bothering to read the thread would be interested enough to read it properly. I should have made it clearer.

Also I completely agree with you on scaling in.

EDIT: Bint- You may want to think about getting some help.

 

[eegozi]

Eegozi, confusion in communication.

No, I completely agree with you. I grouped all posts on this topic together and especially yours because it stood out as someone saying - “and it still adheres to the 2% or less rule of capital at risk for the trade based on where the stop loss is placed.” Maybe I should have highlighted what you were saying. I was going on the assumption that anyone else bothering to read the thread would be interested enough to read it properly. I should have made it clearer.

Also I completely agree with you on scaling in.

EDIT: Bint- You may want to think about getting some help.

No problem Jason. What I meant here was that I almost always risk about 0.5% - 0.75% per trade. SOMETIMES I see a REALLY juicy setup and I think this trade is HIGHLY likely to take off (like my recent trade in gold), so I risked 1.5% (2-3 times the usual). This 1.5% still adheres to the 2% rule you are familiar with in trading. However, I still risked all the 1.5% at the same entry price and did NOT scale in here. I bought and let the trade ride until I saw it go parabolic and then set my stop tighter than usual as it skyrocketed because I new it would revert to the mean and set me up for another round in the near future. This way I took all of my profit off the table VERY close to the high.

I guess I should have clarified what I meant.

Good Luck.

 

[gurutrader1]

I reckon the scaling out/in method is not a good strategy. Take scaling out for example, you enter a trade based on your judgement on the market trend, and then the market has proved otherwise, but you still keep the illusion thinking the market could reverse. I consider that as an emotional decision.

The best way is once you find that your initial decision was wrong, quickly discard it and minimise your loss; keep the money for another attempt.

 

[the hare]

I've posted this before, the maths is wrong in places, and the basic methodology and concuions are a bit screwed up but its a useful exercise for anyone trying to get to grips with the advantages / disadvantages of scaling in and out.

 

[Phantom666]

I would only ever scale in / out if I was forced to due to liquidity, or if I was building a long-term position. Otherwise I enter in one place and exit in one place.

I cannot see how it helps if one is trading intra-day.

 

[tomorton]

To me, scaling in and scaling out is like the issue over screenwatching and 'managing positions' (i.e. winging it) as opposed to set and forget orders with hard stops and targets, or running winners - these techniques may be made to work profitably or not depending on the trader's skills and application but either way they are signs the trader doesn't know what he wants out of the trade and can't decide what risk is acceptable and what reward is achievable.

 

[KenMedanic]

AARRGH... I trade the NQ exclusivly... I can get god setups and entries... I just seem to be so trigger happy to take a 5 point ofr 7 point gain..and then watch it turn to what would have been so much more. Today, just two trades alone I pulled 10 points, had I trailed them up it would have been over 36 points.

anyone have any advice

Hi, Generally you should have an exit as an integral part of your trading strategy. Your strategizing is good as your entries are accurate. Why not employ the same energy in your exits.