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Chapter 36, Part I. Scaling of Position.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, May 16, 2012.

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  1. Administrator

    Administrator Just Administrator :-)

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    Part I. Scaling of Position. [​IMG]

    Commander in Pips: Since we’ve discussed the basic rules of money management and leverage application - you can start to trade with them and I have sufficient confidence that you will not blow out your trading account. We know how to estimate the value of your position, its link with risk management – now let’s add some flexibility to this. Probably, if you just have started to trade, you may stand without any scaling of your positions, but a bit later you may try to apply it.

    [​IMG]


    Pipruit: And what is scaling of a position?
    Commander in Pips: Scaling means gradual increasing or decreasing of the value of your initial position in the process of trading. This could give you a lot of advantages – increased profit, probability to get it, lock in some profit or even reduce risk. But to properly apply that issue – you have to follow money management rules. If you will blindly add to your position without any reasons and limitations – be ready for huge blow out of your account some day. Our task in this chapter is to discuss how to apply scaling.


    Initially it is better to foresee scaling and write it down in your trading plan at some price level. This will let you to do this reasonably and calculate risks ahead of scaling, so you will not need to think about risk in the process of trading. This is just safer.

    [​IMG]


    Pipruit:
    And why do we need it? I feel quite comfortable with my initial
    position…

    Commander in Pips: That’s good. I do not disagree with you. This is just an option – you can use it, you can ignore it. But let’s discuss it first, and then you will be able to make reasonable choice, ok?

    Pipruit: Ok, ok – what is so fascinating about scaling?​
     
    #1 Administrator, May 16, 2012
    Lasted edited by : Oct 13, 2016
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