Trader Mike

You know how I love the money management aspects of trading — here’s a must-read article by Michael Taylor on scaling out of trades.

In ‘Scale Fish not Trades‘ Michael Taylor discusses why scaling into positions is not a good idea:

I have tested and retested scaling into trades in all my systems. And on every system I have created…scaling into a trade produced mixed results. Not one garnered better results than the original non-scaling method.

In response to Michael’s post, Jon ‘Fickle Trader’ Tait explains why he scales into positions:

Part of the reason I like using 3 buy points is that I see it as an alternative form of volatility based-position sizing. Rather than basing position size solely on the historic price volatility, the 3 buy-points base position size on the stock’s potential drawdown while still remaining healthy at any given point in …