How to Trade Using Scaling Out

Scaling out is a way to close transactions that generate profit only, while transactions that are still losing money will not be closed.

There are two things you need to remember when implementing this strategy:

1. The more you pass up the transaction, the greater the risk that will be faced.

2. Make sure you always use the money management rules, so there is no need to experience overtrade transactions on your trading account.

The following, an example of a daily chart

For example, there are 4 transactions that use the same volume of 4 lots. Transactions are made based on price reflection that has been fitted with pending sell orders in the reversal area. After the pending order is carried out given the decrease seen in the first black arrow in the picture above, it can be predicted that the price will continue to plunge down. A decline of 250 points from the opening position.

After the price reaches the second black arrow, one of the transactions begins to close. So now there are 3 transactions left. When the price touches the third arrow, the transaction closes and leaves two transactions that still survive. The closing of the transaction gave a profit of 600 points.

Furthermore, we can observe that the price is still moving and the trend is still showing its bearish strength. The third transaction position is closed when the price has reached the third arrow. From the three close positions, the trader had collected a profit of 1050 points. Until finally, the fourth position is closed the same as the closing of the first to third position.

You can make the Scaling Out strategy a reference for useful transaction methods. But keep in mind that no single strategy is perfect, including Scaling Out. The ideal trading must have a trend that can last for a considerable period of time. It should be noted, if there is only a sideway on the market, then Scaling Out is not appropriate to be applied.

Tweet