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What exactly is the 10% scale-out rule?

Whenever I enter a swing idea and the stock blasts higher and exceeds +10% on an intraday basis I automatically close out 1/4 to 1/3 of the position into strength. No questions asked! Depending on the average true range of a stock and/or closeby major PLL levels, this threshold could vary. Origin of the rule was a tweak to avoid that gains in swing trades entered via quiet & tight setups vanish one day after a one bar wonder and to secure or lock-in the setup specific R-multiple in general. Subsequent trigger events call for reduced scale-outs.


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