Anybody scale trade ETF's?

Discussion in 'ETFs' started by JeffUSA, Feb 22, 2010.

  1. JeffUSA


    Was thinking a system like this could be profitable on ETF's like GLD, SLV, etc.

    Please note if you have read any of my other threads this is not one of the systems I am using. I am just fascinated by trading systems and I am constantly looking at exploring new ones.
  2. as opposed to people that go all in on one entry>
  3. JeffUSA


    Now that I have thought about it more this system is probably not the way to go.

    Scale Trading works like this. Everytime GLD (or whatever) goes down 4 you buy 1 unit and then when it goes up 6 you sell 1 unit. The numbers I picked could be anything. With this system you just need to make sure that your spacing between buy amounts is big enough so you have enough money to withstand a good drop in the share price.
  4. This reminds me of the D'Alembert "pyramid betting system" for roulette and blackjack.
  5. This is NOT scale trading. Scale Trading is a methodology based on the assumption that commodity prices ultimately move on factors affecting supply and demand. Two basic principles guide the scale investment strategy.

    -- Is it a bargain price?
    -- Are the supply and demand dynamics about to change in a significant and favorable way?

    If the answer is yes to both questions, the investor begins buying the commodity at progressively lower prices until it stops declining. Once contracts are bought, they are then sold at progressively higher prices.

    Normally, it was buying commodities in the bottom 30% or so of their historical price.
  6. JeffUSA


    TraderZones is right. I forgot about the part where you are only supposed to buy within the bottom 30% of the commodity's historical range.
  7. And commodities/hard goods were supposed to be the only instruments, as something like lumber, silver or grain has a bottom, but something like currencies & stocks can go to zero.
  8. cew90032


    Does anyone have a scale they have been successfully using to trade etfs? Bob Wiest ever write anything on this?