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I've had this doubt about scaling in for quite some time, I've looked at the multiple scenario's in Encyclopedia about this problem but did not find an answer. Recently I've been watching course videos on scaling in and noticed one thing.
All the above slides are videos on scaling in (35B,35C) from the course. In the above slides The trader takes 2 buy the close trades and 1 sell the pullback trade, lets talk only about the bull scenario. I notice that Al scales in to the trade as long as the market is above the major higher low AKA. swing stop has not been hit.
Does that mean if the swing stop (major higher low) has been hit then the trapped traders give up on the trade and take the loss.
I got this idea when I was watching another video 52B
the scenario in 52B is sell the close bear BO and the traders get trapped and Al does not talk about scaling into trades in this scenario, The only difference 35B,35C has from 52B is that the swing stop has not been hit.
So, should I give up on a trade if my swing stop is hit?
Ideally, you have to let the stop take you out, it's there to protect you from the worse case scenario and you have to let it do its job. You can always exit sooner with a smaller loss if there is a good reason.
Well-detailed question with good points.
To add my opinion: I use market cycle as reference instead of just levels. For example, in a strong bull trend, it likely transitions to trading range, not bear trend—so even buying late, scale in around bull climax/last leg low. Protected by cycle: Bull climax low (major higher low) hit doesn't prevent trading range likelihood; scale-in remains valid.
In conclusion, market cycle reading > major swing levels.
PD: scaling in is trading's base jumping—highest mortality rate modality. Most traders I know close losers and reopen rather than add. Al warns against scale in all the time.
Check out Paul Tudor Jones' wall, a legendary trader worth over $8 billion.
Shouldn't a scale in trade be a trade that is a reasonable trade on its own regardless of whether or not you're trapped in a losing trade already?
