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I am a long time scale trader in stocks. I made my fortune and
retired early with scale trading using spreadsheets at first in the
early 1980's and than later on I began using Metastock after it was
invented. Metastock was easier than a spredsheet to keep my
positions under control. In those days it was the old PC-XT with a 10
meg hard drive and DOS 3.3.
I closed out all scale trading positions in 1998 when it was clear
the stock market was well into a bubble. All the gold in Fort Knox (
if there is any left in there ) could not finance dollar scaling into
a collapsing bubble. The bubble is still collapsing, and will
continue to collapse for a complete retracement down to the DJIA
2,700, in my opinion. My reasons for that is another story.
The scaling method I used was absurdly simple. And it worked EXTEMELY
WELL for many years because we were into the greatest bull market of
all time. Based on the Kondratief Long Wave, I knew that the year
1982 was the beginning of the "Great Bull Market," which would be
followed by a bubble. So Dollar Scaling was IN. ( Knowing about the
Kondratief Long Wave is like having a crystal ball into our future,
and that is just as true today as it was then ).
Once I took a position, I left horizontal lines at my "Scaling In"
levels, and open orders with my broker. Ditto, when it came time
to "Scale Out," I left horizontal lines in MetaStock for the scaling
out levels. Open orders with my broker took care of them. I used a
full service broker who kept my orders active for years if necessary.
The simple formula was to double my investment on each 50% decline in
QUALITY low debt stocks or else hold for a profit. As profits showed
up, sell 50% on each 100% advance.
When this bear market finally ends, I will probably start dollar
scaling again. Scaling only works for bulls. Bears beware.
There was a book written about scaling commodities. But I never got
into it because of the serious slippage problem during contract
expiration. Expiration rollover can be devastating to a scaling
system. I think stocks are FAR better suited for dollar scaling. They
generally don't expire ( if they have low debt and good
fundamentals).
I don't think Metastock is capable of doing a Dollar Scaling system
test. If you learn programming, scaling can be back tested
using "C", Visual Basic, or Delphi Pascal. It is well worth doing, in
my opinion. Under the right conditions, dollar scaling is extremely
profitable. Been there and done it.
Grizz
--- In equismetastock@xxxx, "al_barani" <alberto.barani@xxxx> wrote:
> I would like to know if there is anyone that has written metastock
> formulas for scale trading.
> I know that it would be enough to have pen'n'paper (+ brainwork of
> course) to scale a commodity but... havin metastock it could be
> useful to check the past performance of a scale method and
especially
> have statistics.
> Thank you !
> regards
> Alberto
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