I understand the idea of this, but when do you actually pull the trigger to add to your position or take away?
Is it based on some profit target maybe or a % or your SL?
Do you already know you’re going to do this before the trade or does it really depend on what you’re seeing on the charts live /during a review?
Does it matter whether you’re scalping (makes most sense to me here since I’m watching the charts) or trading on something higher like the daily? Like do daily traders do scaling too?
I have come round to thinking that scaling in/out is a way of massaging results, so that these metrics look better, rather than making your trading more profitable.
I was reluctant to chime in on this because I am unclear on this, as well. I trade D1, and my trades could last weeks. I often get shaken out before then, but that’s besides the point.
If you scale in, and price pulls back three days later or a week later, you just lost your perfect entry.
This is right on the nose.
And I’m actually on the fence about scaling in. I prefer to scale in at the beginning of the trend. Once the random park walk starts, price action can get choppy.
However, I’ve seen some very clear signs that it’s favourable to add, and I didn’t because I was scared, then price goes to the moon.
I, myself, and trying to get more comfortable with pyramiding.
Can you explain this a bit more please? Do you mean it’s just about looking cool, or something?
Do you think it demonstrates a lack of confidence in the trade?
Yes, lack of confidence certainly, but perhaps that is just another way of describing over-assessment of risk - two sides of the same coin?
The way most trading is taught is that the trader spots an exotic chart or indicator signal and enters before anyone else has seen this. They ride the price move and exit on the same sort of logic.
These are implicitly transient situations and therefore what counts is preserving capital so as to be ready for the next “strike”. This “hit-and-run” thinking leads inevitably to the views that the most important feature of a trade is the entry, and that lost unrealised gains do not count. The latter is literally the case as most traders even if they conscientiously run a trading journal or trade log do not even measure lost unrealised gains. As if its not real money FFS…
Do you mean as far as what TF I should be in if I’m thinking of doing this?
A for instance is a USDJPY short trade I’m in on the 1H. Price has come back down and closed below a historic resistance line. On the 15m chart, I’m seeing 7 down candles, and the current candle is another red on the 1H. All signs are pointing down. Would any of you add onto your trade right now?
I think scaling in can be very risky, if you’re confident in your trade and using good risk management, just start out with a bigger lot size. No need to make it more complicated and have your eyes glued to the screen
I highly respect you @tommor
Never heard the term “massaging results” before.
I “think” I know what you’re saying, but can you please elaborate on your meaning?
What I mean is using a tactic to make various metrics look impressive rather than really getting the best out of a trade, that is, the most profit for the least risk.
Sometimes win rate can be made to look good. for example if you are in a profitable position and you add in a series of small additional trades and close each very quickly. It can make it look like you took a dozen trades and 12 out of 13 trades were winners - but the loser was the original which the trader mismanaged into a loss which was greater than the aggregate wins.
Another favourite for people who like to massage their results is r:r. Some traders report their target r:r which they drew on the chart rather than the actual realised r:r after they had closed their trade. Plus, r:r says nothing about the respective sizes of gains and losses.