Scaling In
Adding to a position in increments as price moves in your favour, building size only when the trade is proving itself right.
Scaling in means entering a position across multiple smaller trades rather than all at once. The disciplined version adds to a winner only after it has confirmed the thesis — each addition is at a better price than the last (pyramiding into strength).
The risk management key: each new tranche must use a stop that keeps total position risk within the original risk budget. Scaling in without adjusting the aggregate stop often creates a position far larger than planned.
Example
Plan: 300 shares max risk. Buy first 100 shares at $50 (stop $48). Stock breaks out to $52, buy 100 more (stop raised to $50). At $54, final 100 shares (stop at $52). Full size built, still within the $600 original risk limit.
Related Terms
Portfolio Heat
The total percentage of account capital currently at risk across all open positions simultaneously.
IntermediatePosition Sizing
Calculating exactly how many shares, contracts, or lots to trade so that a stop-out costs no more than your chosen risk percentage.
BeginnerRisk Per Trade
The percentage or dollar amount of your account you are willing to lose on a single trade. Typically 0.5–2% for most traders.
BeginnerScaling Out
Exiting a position in pieces as price advances, locking in partial profits while letting the remainder run toward a larger target.
Intermediate