Scaling In and Out of Positions
A 1-minute lesson from the MarketPro academy, one of 22 in risk management.
Scaling refers to building or reducing a position gradually rather than entering and exiting all at once. It gives traders more flexibility but also adds complexity to risk management.
Scaling refers to building or reducing a position gradually rather than entering and exiting all at once. It gives traders more flexibility but also adds complexity to risk management.
Scaling In
Scaling in means adding to a position as a trade develops in the intended direction, for example after price confirms a level is holding. This differs from adding to a losing position (often called averaging down), which increases risk on a trade that has not been validated by the market and is generally considered a much riskier practice.
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Lesson 16 of 22 in Risk management
Run the numbers while this is fresh
The arithmetic in this category has a free calculator on this site, no sign-up and nothing leaves your browser: Position size calculator, Risk of ruin calculator, Drawdown calculator, Profit & loss calculator.
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Not investment advice. Past performance is not indicative of future results.