Understanding Hedged Scale Trading (McGraw-Hill Trader's Edge) [Kindle Edition]

Thomas A. McCafferty (Author)

Editorial Reviews

Product Description

Relatively simple yet highly disciplined, scale trading has become one of today's most popular and rewarding--yet risky--futures trading methods. 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.

From the Back Cover

Practical Techniques for Leveraging Consistently Greater Profits­­With Dramatically Lowered Risk­­In the Futures Market

Scale trading is one of the most financially rewarding methods of trading in today's turbulent markets. At the same time it can be one of the riskiest. Understanding Hedged Scale Trading explains a proven method for taking advantage of scale trading techniques while strategically using options as a hedge to dramatically reduce that risk.

"Futures trading is a lot like war. The winner is the one standing when the loser is forced to sign a treaty. The person standing is the one with an edge who trades defensively."

Understanding Hedged Scale Trading shows you how to win the war. Explaining every facet of this highly potent trading method­­from how to select your scale trading targets to advanced hedging and scale trading techniques­­this step-by step book discusses:

• Solid, proven ideas and approaches for getting started
• Factors to consider in choosing a market to trade
• Effective methods for rolling positions over to extend expiration dates­­and increase profit opportunities

Profitable scale trading requires strong nerves, above-average tolerance for risk, and the ability to understand and use leverage. If you have the nerves and the risk tolerance, Understanding Hedged Scale Trading shows you how to control the leverage­­reducing your losses and increasing your ratio of profitable trades in every type of market.

"Profitable futures trading depends on getting an edge on the market, taking advantage of the edge whenever possible, and doing nothing when the edge is not evident. This book is all about teaching you where there is an edge in the futures market and showing you how to take advantage of it."

­­From the Introduction

Scale trading provides the edge and hedged scale trading sharpens that edge, allowing experienced traders to stay on both sides of the market and use their edge most effectively. Understanding Hedged Scale Trading covers everything traders need to know to work with the increased leverage provided by scale trading while covering their backs against the inevitable moments when, despite taking every precaution, they find fast-moving markets moving against them.

It is the only in-depth treatment of hedged scale trading on the market. This high-level trading book provides an easy-to-follow roadmap for combining the increasingly popular hedged scale trading method with the judicious use of options to control downside risk. Author Tom McCafferty­­a veteran of nearly three decades in the futures industry who has seen everything and is fazed by nothing­­shows you how to keep your wits about you in the heat of futures trading battle as he discusses:

• The mechanics of scale trading, and the similarities and differences between traditional and hedged scale trading
• Techniques for effectively offsetting the cost of commissions­­the unspoken yet omnipresent cost of trading
• Strategies for grabbing quick profits in the brief period of increased price volatility referred to as the Red Zone
• Methods to reduce margin calls­­and avoid your broker closing out your positions before their full potential is realized
• Proven tactics for applying hedged scale trades to commodities groups including grains, foods and fibers, energies, metals, and entire indexes

Understanding Hedged Scale Trading is all about using your brain­­instead of your bucks­­to take advantage of market turnarounds. Filled with examples of both successful and unsuccessful scale trades, it provides strategies to minimize trading risks as you maximize market leverage, initiating trades in falling markets and then waiting patiently for the inevitable laws of supply and demand to drive the markets back up­­and dramatically increase your risk-adjusted returns.

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Product Details

• Format: Kindle Edition
• File Size: 1343 KB
• Print Length: 250 pages
• Simultaneous Device Usage: Up to 4 simultaneous devices, per publisher limits
• Publisher: McGraw Hill Text; 1 edition (May 23, 2001)
• Sold by: Amazon Digital Services
• Language: English
• ASIN: B000FA5MC6
• Text-to-Speech: Enabled
• Average Customer Review: 3.5 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #633,700 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
  • #86 in Kindle Store > Kindle eBooks > Nonfiction > Business & Investing > Investing > Options

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Customer Reviews

Most Helpful Customer Reviews

13 of 13 people found the following review helpful:

2.0 out of 5 stars Very disappointing, September 21, 2004

By 

Brewhound - See all my reviews

This review is from: Understanding Hedged Scale Trading (Hardcover)

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).

7 of 7 people found the following review helpful:

5.0 out of 5 stars Currently the definitive work, November 1, 2002

By 

BLS "captqrunch" (Hill Country, TX) - See all my reviews

This review is from: Understanding Hedged Scale Trading (Hardcover)

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.

According to the publisher (and my Amazon search), this is the only comprehensive book on hedged scale trading currently available. Good thing that it's a keeper.