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Tim,
IMHO I think that scaling into a position and scaling out of a position can
be a big help in risk control and help reduce trading stress.
Assuming that :1)one enters a 2 unit position at parameter settings that
trigger the first unit and then follow shortly thereafter with the other and
2) these settings separately have comparable risk adjusted returns, then
RISK will be reduced(will similar returns)! By definition one will end up
the "better" signal on a look back basis, but by spreading the risk across
two positions the infamous "buy at the top" and "sale at the bottom" will be
reduced as only one of the units will be so afflicted. Old fashioned
diversification. Similarly, by exiting one unit at a time the risk is also
spread out.
Perhaps more importantly is the psychological benefit. If you scale in and
out you are not as emotionally hung up on taking or exiting a signal because
it is a partial. If you are not dealing with a world of all or none then it
becomes easier to pull the trigger and not get stressed by the entry or exit
process.
Jim
P.S.
Tim, keep up the good posts and "suffer them slings and arrows".
-----Original Message-----
From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
To: felixty@xxxxxxxxxxx <felixty@xxxxxxxxxxx>
Cc: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Date: Thursday, September 03, 1998 10:49 PM
Subject: Re: Taking Losses and Multiple unit positions?
>
>Maybe other people would like to add to this discussion about managing
multiple
>unit positions? I think this is another tool that many traders have not
added to
>their trading toolbox.
>
>Best,
>
>Tim Morge
>
>
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