Understanding Hedged Scale Trading
$12.83
Understanding Hedged Scale Trading explains this high level trading method from the ground up, outline techniques for trader to hedge scaled positions through the judicious use of options. By explaining how to profit from hedged scale trading while controlling its many risks, it should prove to be among the most practical, hands-on advanced trading books on the market today.
Author’s Introduction:
This book teaches you how to reap the rewards of scale trading in the futures markets without the fear associated with traditional scale trading. As you’ll learn, scale traders buy into descending markets. The concept is “What goes down must come up,” and all positions eventually become winners. Theoretically, this is true. But time and again, I’ve seen good, experienced traders panic when the price of the commodity they are long limits down for 1, 2, 3, or more days in a row.
Limit-down days are trading sessions when a futures contract immediately plunges to its daily trading limit without actually trading. The reason these seasoned traders lost was that they did not put any downside protection on their positions.
If you are holding only a few contracts on the long (buy) side, not to mention having a multiple contract position, it is a most unpleasant sensation to watch prices dive without being able to do anything. It recalls the feeling you get when you are driving a car on an icy road and realize you are skidding out of control. Nothing responds. Trying to brake or steer makes the situation worse. Get the feeling?
Contents:
- The Derivative Markets—Futures
- The Derivative Markets—Options-on-Futures
- Traditional Scale Trading
- Understanding Hedged Scale Trading
- The Criterion for the Selection of Scalable Commodities
- Selecting the Perfect Commodities to Scale Trade
- Mechanics of Scale Trading
- Roll Me Over
- Starting a Scale Trading Business
- A Little Technical Analysis Can Go a Long Way When Scale Trading
- Getting Ready to Scale Trade
- Summing Up the Rules for Successful Scale Trading
Understanding Hedged Scale Trading By Thomas McCafferty pdf
| Author(s) | |
|---|---|
| Pages | 267 |
| Format | |
| Publication Year | 2001 |
2 reviews for Understanding Hedged Scale Trading
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Dawson Correa (verified owner) –
The title of this book is misleading. Only one chapter in the entire book deals with hedged scale trading and to sum it up the author says…”buy puts”. Brilliant. The rest of the book describes scale trading (poorly) and fundamental analysis. If you want to learn about scale trading go to the source. Look at Robert Weist’s, “You Can’t Loose Trading Commodities”. Weist does a much better job describing this trading technique. This book was a real disappointment and waste of money (in my opinion).
Leanna Dunn (verified owner) –
Mr. McCaffery writes with clarity and leads the reader surely towards a grasp of this somewhat arcane futures trading strategy. Scale trading with options means : buying (or shorting) a hedged commodity with the expectation that the price will revert to its mean within a certain period of time.
Specifically, you buy a commodity (sugar, soybeans, oil, etc.) that’s trading toward its historic lows. You purchase put options to put a floor under the trade (limiting your risk), and scale into the trade (buy more futures at pre-determined intervals) if the price continues to fall. You are relying on the near certainty that the price must eventually rise. If you hold long enough and if all goes as it should (i.e., you execute), you will make a boatload of money in the eventuality. Obviously, attempting to scale trade a stock, which may have no tangible worth (think “Enron”) is a bad idea, hence the focus on commodities futures.
“Understanding Hedged Scale Trading” offers a relatively user-friendly technique for playing in the pits. After explaining how the futures markets work, the author gets right down to the real nitty-gritty: deciding which commodities to trade, the mechanics of trading futures, and how to buy more time (roll over your position). There is even a short treatise on technical analysis.