Scaling into trades and position sizing

asked by u/lotte_jones · 1d · 3 answers

Hey all, been trying to get a handle on risk management and one thing I'm struggling with is scaling into positions. I get the concept of adding to a winner or averaging down cautiously, but how do you guys really define your initial position size when you plan to scale?

Let's say I'm looking at $TSLA, expecting a bounce off a key support, but also aware of downside risk to the next level. If I want to end up with X shares total, do I start with 25% of X, then add another 25% if it confirms, leaving 50% for a deeper dip? Or is it more dynamic, based on price action after the first entry? My main concern is balancing capital utilization with not overexposing myself too early.

Specifically, what's your go-to strategy for an initial entry percentage when you fully intend to scale in multiple times? And how do you keep your overall risk, per trade, consistent across these scaling entries without it ballooning?

Join the full discussion

Top answers

  • u/tor· 5 pts· 1d

    For scaling, I often work backward from my full intended position size and then determine my initial entry as a fraction of that, based on where my first stop loss would be. This allows me to define risk for the total trade even before the full position is built.

  • u/mei.choi· 3 pts· 1d

    That's a great question, and it really comes down to pre-defining your 'full' position size and then working backward. For me, the initial size is usually 1/3 or 1/4 of my intended maximum, sized so that if it goes straight to the second downside level, I haven't exceeded my risk tolerance for the entire trade idea.

  • u/kavya.desai· 1 pts· 1d

    That's a great question, and it really depends on your conviction level and the specific support/resistance zones. For me, if I'm planning to scale, I'll typically start with a smaller initial size than my 'full' position, maybe 25-30% of my intended total, and then use those subsequent support levels as potential add-on points with defined stop-loss for each entry.

Related questions