Dr Bandy, what you said is true, about the second alternative. The risk conditions are violated, with further scale-ins,when we double up etc.
But consider, if with each scale-in, we also move the stop loss point.In that scenario, the situation can morph into one, where the risk doesnt increase linearly with position,it increases slower than the growth of positions. Soham --- In [email protected], Howard B <howardba...@...> wrote: > > Greetings -- > > MK wrote: > > What is the benefit of scaling in and out vs. treating them as separate > systems? They basically are separate system. > > --------------------------------- > > I agree that entries made from secondary signals, or whatever you would call > the signals that trigger the scale in, are a separate system. Test them > separately. > > In my experience and research, neither scaling in nor scaling out often > improve a system. This is based on an understanding that risk is fully > assessed before the initial portion of the trade is entered, and that the > full amount of the trade as determined by the risk calculation is not taken > until the final scale in has been triggered. That is, if three scale ins > are perm itted, then the initial position must be taken with only 25% of the > amount permitted by the risk calculation. If the alternative is to take a > full position at the first signal, and then add as the trade is in progress > through scale in trades, the risk guidelines will have been violated. > > Thanks for listening, > Howard >
