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Chapter 36, Part II. Scaling In.

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

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  1. Administrator

    Administrator Just Administrator :-)

    Sep 24, 2007
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    Part II. Scaling In. [​IMG]

    …To a losing position

    Commander in Pips: In the previous lesson we’ve stopped before the discussion of the scaling in procedure. There are could be different scaling in – one is to a loss position while another - to a profitable one. Which one you want to start with?


    Pipruit: Well, let’s start with the bad scenario – a loss position (this is much more usable for me currently…).
    Commander in Pips: As you wish your Highness. In the beginning you always have to keep in mind the properties of any scaling – either it will be “in” or “out”:

    1. Overall trade context should hold when you make scaling;

    2. Your money management rules have to be achieved.

    For newbie traders probably it makes sense to stay away from scaling in, at least during first year of trading. The major question that could arise with scaling into a losing position is why to add to a losing position? If this is a losing position and we by adding more will make it even more losing than it was initially, right?

    Not quite. This will happen, if our point 1 was broken already. If the market has passed our invalidation point and our position is held somehow (interesting how). In other words, when our position is miserably wrong. If you add another miserably losing position – then you will get double trouble. Never ever scale into a position that you wrongly hold after passing throug invalidation point. This could happen only as the result of mistake – you’ve broken your trading plan and did not close you position at the invalidation point.

    #1 Administrator, May 16, 2012
    Lasted edited by : Oct 14, 2016
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