«All-in or Scale-in»
When you enter a trade, you ultimately have two choices. You can enter the entire position all at once, or you can scale in. Entering all at once assumes you’re going to be right, and you nailed the optimal entry. After all, why wait to enter the rest of your position if NOW is the best price you will get?
In contrast, scaling in consists of entering a partial position now and leaving the door open to enter the rest of the position later. This approach assumes the first entry may not be the best and allows you to use unfavorable movement to your advantage.
Suppose you want to buy 100 shares of SPY. You can either buy all 100 shares immediately or only buy a portion, such as one-third or 33 shares. If after your pared-down purchase, SPY falls in value, you can add more shares at a better price. This lowers your average cost, thus improving your positioning and the probability of eventual profit.
Scaling in makes it easier to buy low and sell high because you have multiple chances to do so. It can be a great tactic for those who are gun-shy and find It difficult to pull the trigger.
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