Understanding Hedged Scale Trading


  • Pages: 267
  • Format: PDF
  • Published Date: 2001


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?


  • 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