silver99 

Beneficial lessons that I have learned from my time in TSJ and FIO: 1.) If it fits your strategy, take the trade, don't hesitate. 2.) Never be afraid to learn something new, or at a minimum to give it a look-see/try. 3.) Life and trading is a journey, enjoy the ride. Newt

Some great and very wise points Newt, good to see you posting!

phantomtrader 

I agree. Even if you're an experienced trader, you can't know when the market is just going to blast you out of your position. And as TWDsje said, if it rapidly turns into a trend day, how much are you willing to lose before you believe what your eyes are telling you? Simple motto: Trust no one. Trust nothing. In, out, get it done, shut it down.

This is my preference as well. But that's just me.

One thing to add here is that scaling in is not only done in range or non-trending days. In the spoos thread I referred to above, the ES was in a crazy-strong bull market for much of that time, and most days were large (up)-trend days. The guys who were successfully trading in this thread at that time basically would just assume an uptrend was more likely, and if price went down they figured it was a good opportunity to get into the trend at a lower point.

I have always thought that part of their success was not (only) being good traders, but also that ES was giving the same type of opportunity most days, and they were observant enough to see it and pile on. They piled on if it advanced, by scaling in as it rose, and they piled on if it dropped by scaling in on the decline. They just wanted to be long and hold on, basically, and the scaling-in part, whether with or against the trend, was just about making sure they got their positions laid on at a good price.

I don't know how well this strategy would work as an all-the-time thing (yes I do, and we know it wouldn't do well at all ).... but that was then, and it fit the action of the market at the time, which is what you want to do.

There were other threads, at the same time, where traders would be fading the advance, because they just knew "It can't go any farther...." and they were the ones who got creamed.

This is not to say that @Big Mike and the others didn't change their style and adapt to more rangy conditions when the market changed. They did, which is what good traders do. They generally still scaled in and out, but without the assumption of a continual bull market. They became more range traders, and still scaled.

So we have these and other examples of successful scaling in both ranging and trending conditions, but only by a very few traders. This is why I would not say that it "is" or "is not" a good strategy in an absolute sense, for everyone in all conditions. Some can do it, some can't. Some don't adapt to changing conditions, some do. Some just prefer less complication in their trading. But I believe that experience has shown that scaling in, especially in a losing trade, is very hard to do well in most circumstances, for most traders.

Bob.

bobwest 

But I believe that experience has shown that scaling in, especially in a losing trade, is very hard to do well in most circumstances, for most traders. Bob.

Absolutely true Bob, well said.

phantomtrader 

I agree. Even if you're an experienced trader, you can't know when the market is just going to blast you out of your position. And as TWDsje said, if it rapidly turns into a trend day, how much are you willing to lose before you believe what your eyes are telling you? Simple motto: Trust no one. Trust nothing. In, out, get it done, shut it down.

Thats fear talk. The market tends to be relatively consistent and if you cannot handle the average daily range then something is wrong.
I think at the very least you should anticipate possible extremes for the day based on prior days movements. You do get outliers but those tend to coincide with major news events and if you are not aware of these, you will get blindsided a lot and so sad for you but you only have yourself to blame.

I also dont understand why you have to believe something before you make the decision to cut a loser? I just dont get this, if you planned your trade then the decision to exit already exists in the form of a stop order. Its one thing to call yourself a discretionary trader but another beast entirely If you think you can keep it together and think rationally whilst the market tears another one for you. The answer? Plan the damn trade. Its not about belief or trust or whatever.

Grantx 

Thats fear talk. The market tends to be relatively consistent and if you cannot handle the average daily range then something is wrong. I think at the very least you should anticipate possible extremes for the day based on prior days movements. You do get outliers but those tend to coincide with major news events and if you are not aware of these, you will get blindsided a lot and so sad for you but you only have yourself to blame. I also dont understand why you have to believe something before you make the decision to cut a loser? I just dont get this, if you planned your trade then the decision to exit already exists in the form of a stop order. Its one thing to call yourself a discretionary trader but another beast entirely If you think you can keep it together and think rationally whilst the market tears another one for you. The answer? Plan the damn trade. Its not about belief or trust or whatever.

but the plan doesn't always go to plan and if you get signaled out then get out.. you cannot plan for everything before, sometimes you need to roll with the punches a little bit.

-P

MiniP 

but the plan doesn't always go to plan and if you get signaled out then get out.. you cannot plan for everything before, sometimes you need to roll with the punches a little bit. -P

You absolutely can plan for everything prior to taking on a trade and that is what your stop and target are for. The only thing you have no control over is where Mr Market is going to go but so what, you have control of everything else that you do. Rolling with the punches means what exactly to you? Sitting agonising over what to do when your trade goes underwater is a poor strategy because that kind of stress compounds over time and you will wear yourself out and start talking, thinking, and acting scared. You know what happens when youre scared right? The market gets you. Every time.

Grantx 

You absolutely can plan for everything prior to taking on a trade and that is what your stop and target are for. The only thing you have no control over is where Mr Market is going to go but so what, you have control of everything else that you do. Rolling with the punches means what exactly to you? Sitting agonising over what to do when your trade goes underwater is a poor strategy because that kind of stress compounds over time and you will wear yourself out and start talking, thinking, and acting scared. You know what happens when youre scared right? The market gets you. Every time.

you can plan for most events ill give you that but the thing is you have no idea what the market is going to do BUT lets say trump stain tweets about jobs or something like that ... you can't plan for that , that is a random event so are you either going to ride the loss or get out with a loss of a few bucks when the tides turn. Now I believe we have different approaches to trading and If i remember from your journal yours is more of a HTF trader . Now I on the other hand am more of a short term trader so the whips and things like that are not something I normally endure... signaled out before the t/p then GTFO... now if I went back to a HTF daily/4hr charts like I use to then yes I would not pay attention as much to these events and have more of a set and forget that it sounds like you have.... if your under water who cars if you truly trust your edge you will know that over time it has shown you come out on top so you roll with the punches.

Also there and mainly different signals out.. ema changes, start making HH/HL if im short, large engulfing bars DB, DT's FBO's. you can account for some ex in a trend price moves down and DB's/ranges for 30 minutes this could be a sign to jump ship. kinda like the NQ right now we DB'd then p/b to about the 50% of the open move down we could of shorted this but after being supported 3 times it would be wise to close that short and I did .. my t/p was another 10 pts away from the bottom but signs like this normally show a trend change or at least a large p/b that isn't a part of my plan.


but to each there own I can see your system and it does work... once I start back up with HTF's I will have a similar approach to a certain degree.


-P

bobwest 

I think that in this discussion we should not lose sight of the fact that, if you just automatically double down every time you have a loss, you're crazy, and soon out of business. Nor of the fact that some traders can scale in on a loss and do it well, but not automatically and not foolishly. There are several years of posting on the spoos thread where such traders as tigertrader and @Big Mike consistently added to positions when price went against them, and also stopped and bailed out when it went far enough that they clearly were wrong on the trade, according to criteria that they were clear about when the trade started. Although this was a few years ago and the thread is now dead, it was an education at the time. (If anyone has not looked at it, it starts here: Spoo-nalysis ES e-mini futures S&P 500 Lame Ducks Both Fed Chairman Bernanke’s remarks yesterday and President Obama’s speech last night about his jobs plan; combined, failed to reassure the market that a solution to the country’s economic woes was at hand, and the … . Be warned it covers many years and is mostly just trades being posted, so it's not light reading. ) That said, I am never going to do it, having learned the lesson early and expensively. But there is more than one way to successfully trade. Also, more than one way to lose everything. I think we have seen examples of every conceivable strategy done poorly, and a few examples of them being done well (some of them anyway. ) Bob.

Hi Bob

I agree with all of that. In fact, I don't believe anybody would dispute any of it.

To me, it goes back to experience. What I mean by 'experience' is all of the skills that go to make up a successful trader, including mental skills, analytical skills, execution skills, and so on, including a hefty live track record. Mike, Inletcap and other experienced traders can probably count live trades under their belt in the thousands if not in the tens of thousands.

That's not to say that each and every time they averaged down they were successful, that much to me is obvious.

Is averaging down appropriate for all traders? Probably not. Nor is it something that, as you correctly pointed out, should be done blindly. But in my view, those who average down blindly do so out of... wait for it.... inexperience, that is, they have yet not (b)reached that threshold I mentioned a few posts back. Again, I want to stress, this is in the context of a trader who has determined that averaging down should be part of their trading strategy and I repeat, it is not necessarily something for everybody.

Grantx 

Thats fear talk. The market tends to be relatively consistent and if you cannot handle the average daily range then something is wrong. I think at the very least you should anticipate possible extremes for the day based on prior days movements. You do get outliers but those tend to coincide with major news events and if you are not aware of these, you will get blindsided a lot and so sad for you but you only have yourself to blame. I also dont understand why you have to believe something before you make the decision to cut a loser? I just dont get this, if you planned your trade then the decision to exit already exists in the form of a stop order. Its one thing to call yourself a discretionary trader but another beast entirely If you think you can keep it together and think rationally whilst the market tears another one for you. The answer? Plan the damn trade. Its not about belief or trust or whatever.

I'm a trader, not a crystal ball operator. Remember the old saying: "The best laid plans of mice and men......"

The only evidence that a particular strategy/setup is viable is the history of your own trades. That is your probability function. The rest is all garbage IMO.

I only trade setups that are high probability, so no scaling in at least at this time. I can see how scaling could be good. For instance, if you felt it could get another push higher/lower and you wanted to take the trade knowing that, or if there is more risk going into the trade and you want to reduce your risk.That gets more into trade management though, and how to manage a trade. I would say you should only add to a losing trade if you know for certain that you just got it a bit early, but if you got it early you should really work on your timing. I believe the market is more certain than random, at least how I trade lol