Scaling in and out is a method of money management allowing you to maximize potential profits and limit potential losses, despite the fact the future price movement is uncertain. Scaling means gradually decreasing or increasing the value of your position while trading.

This allows you to reduce risk, increase your profit, and limit losses when the market turns against you. Of course, scaling out and in of trades requires discipline and sound reasoning, proper money management, just like when using any other strategy.

You can choose not to use scaling because it is just an option. But, it has several considerable advantages, if you do not want to. These advantages make their utilization useful. First, the total risk you trade can be reduced. 

In trading forex, there are two types of scaling which are scaling in and scalling out. As with every other money management and trading strategy method with the best forex broker, scaling has drawbacks, not only has its advantages. 

Scalling Into Forex Trading

Scaling into a trade means, with just a fraction of the capital you initially intended to commit yourself with, you open a position, and if price level move in your factor, then you enter more positions.

For example, there are multiple entries. The first position is entered when the market has shown a clear tend. After pull back in the market and continue on in the original direction, a second position is entered. After a second pullback, a third position entered.

Let’s say by scaling in which is one of scaling in and out, you want to enter into this trae with a standard lot. The trade will either lose or win, however, you reduce the total risk by entering just a fraction of the standard lot.

If this position breaks down into mini lots, say (half a standard lot) 5 mini lots. On the first entry. compared to if you use a full standard lot, you will lose much less if the trade does not work out.

You can add to the position, for example, another 3 mini lots if the trade starts to go in your favor. As above, if the trades continue to go well, you can enter two more mini lots.

However, certain disadvantage of scaling into trades which is part of scaling in and out is the reason why not everyone uses it. An increase in overall risk exposure can occur because of poor money management. It could be devastating for your account.

Scaling Out in Forex Trading

For achieving risk reduction, limit losses, lock in profits, similar to scalling in, trader can use scaling out. Scaling out mean, after your position has become profitable, you sell a fraction of total exposure. 

Scalling out can protect you from the sudden price reversal. The market must be tranding in order for scaling out to work. This technique has the main purpose which is to avoid a loss situation as much as possible and stay with the profits.

You must first reach the breakeven point to begin scaling out of a trade. After you are on the winning side, reach it as soon as possible. You can begin exiting positions and lock in profits.

a negative aspect woth mentioning of scalling out as a part of scaling in and out. Which especially find disturbing and novice traders. After you initial exit, a market speeds up significantly and continues to move in your direction. New traders might upset because of this.

But if you have followed your trading plan, it should not bother you because it would protect you from a price reversal. Just as the scalling into trades, this money management method reduces your overall profits. 

The main goal of trading is to get big profits. you can bring your hope for success into reality by trading with didimax forex broker that has various strategies for trading and you can learn anything such as scaling in and out.