• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / ETFs / Commentary / How to Trade ETF Funds Successfully: Scaling-in Strategies for Short Term Traders

How to Trade ETF Funds Successfully: Scaling-in Strategies for Short Term Traders

December 22, 2009 by David Penn

One of the more interesting questions we get about high probability ETF trading has to do with the strategy of scaling-in.

As I have written elsewhere, scaling-in to trades is a strategy that high probability traders use in order to improve the accuracy of high probability trading signals and to potentially boost returns significantly. Scaling-in is such an important part of high probability trading that Larry Connors and Cesar Alvarez, authors of the book High Probability ETF Trading have built one trading strategy that is designed to take maximum advantage of the power of scaling-in, a strategy called TPS for Time Price Scale-In.

Click here to download our new free report: How to Trade ETF Funds Successfully: An Introduction to TPS.

Time Price Scale-In is less a single strategy and more an entire constellation of short term, high probability trading strategies all based on various scale-in tactics. In fact, if you put ten high probability ETF traders who traded TPS in a room, there’s a good chance that you would learn about ten different ways to trade exchange-traded funds using TPS.

What is TPS? At its most basic, Time Price Scale-In is about buying more of a position as it moves lower (or, conversely for a short trade, selling short more of a position as it moves higher). Our research into short term price behavior in exchange-traded funds – research that does back to inception for a large number of widely-traded, highly liquid ETFs – shows that by adding to a initial position on additional weakness, high probability traders can accomplish two things.

Improved accuracy. Scaling-in – or averaging – into mean reversion, high probability trades provides traders with a greater chance that their trades will prove correct.

Potentially greater profit. By adding to positions as they become more and more oversold, traders stand to potentially gain more when those markets recover and the trade is exited on strength.

As I write in an upcoming article for Technical Analysis of Stocks & Commodities magazine, if you compare the performance of our high probability trading strategies with a scale-in and without, you will notice that the “more aggressive” versions that include the scale-in have a significantly higher percentage of winners compared to the regular, non-aggressive versions that do not have a scale-in strategy included.

Of the 5 ETF trading strategies, for example, in High Probability ETF Trading that include both a non-scale-in and a scale-in version, the average difference in percentage winners between regular and scale-in versions of the same strategy is more than 5%.

If you want to learn more about the power of scaling-in and how scaling-in can help improve your short-term, ETF trading, click here to download your free copy of How to Trade ETF Funds Successfully: An Introduction to TPS.

David Penn is Editor in Chief at TradingMarkets.com.

Filed Under: Commentary, Recent Tagged With: ETF, ETF Fund, etf funds, ETF Strategies for Short Term Traders, ETF Trading, High Probability ETF Trading, scaling-in, trading ETFs

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

New Book From Larry Connors and Chris Cain, CMT – "The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk"

We’re excited to announce the release of a new investment book written by Larry Connors and Chris Cain, CMT. The book, “The Alpha Formula; High Powered Strategies to Beat The Market With Less Risk “ combines… Hedge fund legend Ray Dalio’s brilliant insight into combining uncorrelated strategies… With new, minimally correlated, quantified, systematic strategies to trade… [Read More]

Buy The Alpha Formula Now

Connors Research Traders Journal (Volume 57): 7 Real-World Reasons Why Short Strategies Should Be Included In Your Portfolio

In our new book, The Alpha Formula – High Powered Strategies to Beat the Market with Less Risk, we show the benefits of including short-strategies in your portfolio. As a reminder, building portfolios should be based on First Principles – otherwise known as truths. These truths are: Markets Go Up Market Go Down Markets Go… [Read More]

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2023 · News Pro Theme on Genesis Framework · WordPress · Log in