{"id":47496,"date":"2016-01-03T03:19:52","date_gmt":"2016-01-03T11:19:52","guid":{"rendered":"https:\/\/brookstradingcourse.com\/?p=47496"},"modified":"2018-03-25T02:53:38","modified_gmt":"2018-03-25T09:53:38","slug":"scaling-in-techniques-when-to-use","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/es\/ask-al\/scaling-in-techniques-when-to-use\/","title":{"rendered":"Ask Al: When to use scaling in techniques"},"content":{"rendered":"<h2>BPA trading room Q&amp;A: October 2 &amp; 6, 2015<\/h2>\n<p class=\"content-box-green\">Regarding scaling in, you often say traders scale in one point above or below and two points above or below. Sometimes you say scale in only when you get another good signal bar in the direction of your first position. How do you decide when you use which scale-in technique?<br \/>\n<em>Video duration: 7min 26sec<\/em><\/p>\n<div style='position:relative;height:0;padding-bottom:56.25%'><iframe class='sproutvideo-player' src='\/\/videos.sproutvideo.com\/embed\/489adfbb1319efcdc0\/72752e53a6919768?playerTheme=dark&amp;playerColor=' style='position:absolute;width:100%;height:100%;left:0;top:0' frameborder='0' allowfullscreen><\/iframe><\/div>\n<p><\/p>\n<p class=\"caption\">You can also view this video on <a href=\"https:\/\/youtu.be\/fUlgajQT5h0\" target=\"_blank\" rel=\"noopener\">Al&#8217;s YouTube Channel<\/a> if needed.<\/p>\n<h2>Video transcript&mdash;Scaling in techniques<\/h2>\n<h3>How to decide when to use?<\/h3>\n<p><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in.png\" rel=\"attachment wp-att-47564\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in-300x203.png\" alt=\"ES Chart scaling in examples\" width=\"300\" height=\"203\" class=\"alignleft size-medium wp-image-47564\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in-300x203.png 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in-768x521.png 768w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in-600x407.png 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151002-es-chart-scaling-in.png 789w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>Yeah, you bring up a really good point. If I think the market is really range bound in a fairly tight range and not going very far, then I feel comfortable scaling in one point, two points. On the other hand, if I think the market is doing something that is a surprise \u2026 we had an example of that\u2026 you could argue over here, right\u2026 would I scale in one point below 28? I would not. Would I scale in below 22? I would. Why would I not scale in below 28? It\u2019s a wedge bottom &#8212; one, two, three &#8212; and there\u2019s too much risk of a bear breakout. So, in that kind of a situation, I would not scale in below 28. However, I know that some bulls bought above here, bought above here. This is probably not going to be a big bear trend day, and therefore scale in bulls will buy above 33, and therefore I am willing to buy above 33, thinking that there will be at least a 50 percent pullback on that.<\/p>\n<p>A lot of times\u2026 see if I can find another example\u2026 a lot of times, especially in a trading range, where there are logical sells like here, you can argue that it\u2019s logical to sell below bar 40. And if you do, where do you start to scale in? Do you scale in above 40? I don\u2019t know. It\u2019s a trading range, you could, but once you see that you\u2019re going to be thinking it\u2019s going higher. So had I shorted below 40 and had I scaled in higher, I probably would have gotten out on the 44 close. On the other hand, other bears will say, \u201cIt\u2019s coming back to that 40 low and I\u2019m going to scale in, but I\u2019ll wait for a bear reversal bar and then sell below that bear bar. So I\u2019ll sell below 46 and then either get out between my two entries, this low and that low, or I\u2019ll hold for a test of 40 low.\u201d I don\u2019t know if we clearly got there.<\/p>\n<p>So it depends on the circumstances. Usually, I\u2019m much more inclined to scale in one or two points, one or two points and use a wide stop, but in a situation where I think there\u2019s a possible breakout, I do not do the one or [two points scale-in]. And I talked about that over here. There was a potential for a bull breakout here. There was such an obvious short that there was a potential for a bull breakout, so I\u2019m not going to sell above 30. Instead, I\u2019ll wait and if it breaks out, then I\u2019ll buy it, which I did.<\/p>\n<p>I know I\u2019m not being all that clear because it is very subjective. I think, in general, most traders who are scaling in should use the stop entry method. So if you buy and you\u2019re looking to buy more lower, wait for a bull reversal bar. For example, if you buy &#8212; if you bought up here, let\u2019s say you buy the 10 high, and you want to scale in lower, it\u2019s better to buy above 13 and keep your stop below 8, than it is to buy and then buy two points down, two points down, two points down. So I think most traders should do it that way. In the new version of the course, I have an entire video about entering late in the trend, and I\u2019ll be talking about that some in Las Vegas (November 2015) in a few weeks, but that is the basic idea. I think traders starting out, it\u2019s dangerous to be scaling in at fixed intervals&#8211;one point, two point, and three or four points&#8211;and it\u2019s better if they\u2019re thinking of scaling in to do it with a stop entry for a second trade.<\/p>\n<h3>Don&#8217;t buy first leg down<\/h3>\n<p>Let me try to find another example. So here, for example\u2026 let\u2019s say you bought here, which you would not because odds were there was going to be a second leg down. Let\u2019s say you bought 34 \u2026 the 34 high \u2026 I would not buy the 34 low or two points lower if I were starting out. I would buy the 34 high using my wide stop, and then when it reverses up above 41, buy above 41. And because I know that the <a href=\"http:\/\/www.investopedia.com\/articles\/active-trading\/030515\/what-difference-between-institutional-traders-and-retail-traders.asp\" target=\"_blank\" rel=\"noopener\">institutions<\/a> are doing that, a lot of times I\u2019ll look at 34 and say, \u201cOh, that\u2019s a bad buy,\u201d but I know the scale-in institutions are looking for a good bull bar, 41, to buy so then I will buy above 41 or 42.<\/p>\n<p>So a lot of times, you\u2019ll hear me say that I\u2019m buying, or that it\u2019s a reasonable buy because the scale-in traders or institutions will take that buy. I\u2019m not sure if I\u2019m being all that clear, but bottom line: If you\u2019re starting out, I think it\u2019s risky to sell and then sell more two points higher, sell more at two points higher. It\u2019s better if you\u2019re looking to scale in, you sell, and if it goes higher, wait for a bear reversal bar and then sell below the bear reversal bar. So let\u2019s say you sold the 16 close or below 16, don\u2019t sell more here. You wait for that to sell and you sell below 21.<\/p>\n<p class=\"caption\">Question follow up \u2014 October 6, 2015<\/p>\n<p><em>Okay, Al, I asked this question on Friday, but the audio was not clear so I\u2019m posting it again. Regarding scaling in, you sometimes say scale in only when you have another good signal in the direction of the first position. How do you decide which technique to use?<\/em><\/p>\n<h3>Take account of possible deep pullbacks<\/h3>\n<p><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151006-es-chart-scaling-in.png\" rel=\"attachment wp-att-47566\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151006-es-chart-scaling-in-300x228.png\" alt=\"151006 ES Chart scaling-in example\" width=\"300\" height=\"228\" class=\"alignleft size-medium wp-image-47566\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151006-es-chart-scaling-in-300x228.png 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151006-es-chart-scaling-in-600x456.png 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/01\/151006-es-chart-scaling-in.png 704w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>Let me give you an example, okay? Let\u2019s say you bought the 47 close, right? And then you start seeing it sell off. Do you buy it one point lower, two points lower? No. We\u2019re in a trading range so we can get a very deep pullback. So whenever there\u2019s a reasonable expectation of a deep pullback, reasonable potential of a deep pullback, I\u2019m not going to buy one point lower, two points lower. If I buy that close and I decide that I\u2019m going to keep my stop down here, the next buy is going to be above a bull bar, bar 52, right?<\/p>\n<p>On the other hand, if I\u2019m buying what I think is a very strong bull breakout and I think the odds are high there are buyers below, then I will buy one or two points lower because I think the odds of a deep pullback are small. Same with selling. I\u2019m just trying to find something obvious, like here. Here, I think this is a bull breakout. I think we\u2019re Always In Long. And there\u2019s an urgency to it; or here or here, there\u2019s an urgency to it. So there, if I buy, I\u2019m probably going to buy one or two points lower because I think it\u2019s a breakout and the probability is high that we\u2019re going higher, and that the pullback will be brief. If I\u2019m buying in a trading range, I think there\u2019s a high risk of the deep pullback and I\u2019ve got to be really careful buying too high and scaling in too high. So if I\u2019m buying here, I\u2019m buying after the market has gone up 10 bars. That is high. So to me, I don\u2019t want to be buying again here. If I\u2019m going to be buying again, I want to buy it with a stop.<\/p>\n<p>So I hope that makes sense. So in a trading range, I prefer a second entry on a stop. Usually, I don\u2019t buy high in a trading range. If I do, I get out pretty quickly. And instead &#8212; in a situation like this &#8212; I say, \u201cHuh, the scale-in bulls will be buying here,\u201d so I start looking to buy, thinking that we\u2019re probably limited in how far down we\u2019ll go.<\/p>\n<p>Here, bears sell this close. I\u2019m going to be selling below bars or I\u2019ll be selling somewhere in the middle, thinking that scale-in bears will &#8212; will be selling with stops.<\/p>\n<p><em>Al Brooks<\/em><\/p>\n<p><a title=\"Al Brooks&#039; trading room\" href=\"https:\/\/www.brookstradingcourse.com\/online-day-trading-room\/\">Information on Al&#8217;s Online day trading room<\/a><\/p>\n<hr \/>\n","protected":false},"excerpt":{"rendered":"<p>BPA trading room Q&amp;A: October 2 &amp; 6, 2015 Regarding scaling in, you often say traders scale in one point above or below and two points above or below. Sometimes you say scale in only when you get another good signal bar in the direction of your first position. How do you decide when you [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[159],"tags":[],"class_list":{"0":"post-47496","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-ask-al","7":"entry","8":"has-post-thumbnail","9":"override"},"featured_image_src":null,"author_info":{"display_name":"BTC Admin","author_link":"https:\/\/www.brookstradingcourse.com\/es\/author\/richardhk\/"},"_links":{"self":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts\/47496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/comments?post=47496"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts\/47496\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/media?parent=47496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/categories?post=47496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/tags?post=47496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}