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RT'ers:
I am a little late joining the scale trading discussion, but I wanted to add
my 2 cents in.
I have read Wiest's book and I subscribed for a while to the newsletter "The
Scale Trader." I used this information and made money - now for the rest of
the story:
I was scaling Feeder Cattle through the "Mad Cow" scare. I had intended to
use
$15,000 - 20,000 in a small scale as per the directions of the book and the
newsletter. I ended up down $36,000 in that scale before the price came back.
I kept figuring out at what price I would have to bail out - would it be
50,000 or 75,000?
I eventually made about 12,000 after a period of about 1 year (and a lot of
Rolaids).
I just recently finished scaling out of an Orange Juice trade using this
method and I made money. But I am finished with this method.
I agree with several comments that were made about this method - it has a
strong conceptual basis. But I became really concerned that something could
fundamentally change the market for beef - such as a disease that would render
all beef unfit for consumption. Why couldn't cattle go to 30 cents and take
me with it? Where is my "puke point" (get out)?
I just don't like the open ended (or unknown) risk associaed with it. I would
much rather know that I am risking 1 or 2 percent of my equity and that my
stop is resting in the market ready to take me out - call me a wimp, but I
sleep better.
Good luck to all,
Jim Hamer
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