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Scale Profit Orders with Initial Component

ScaleTrader provides many “add ons” that allow you to customize your order based on your trading strategy. A basic scale order might involve simply scaling into or out of a position, with or without a profit trade. The Profit taking orders are submitted against a filled order component at a specific price level, where the price is calculated using the component price level +/- the defined profit offset. If you use a higher Initial Component size, the profit orders are submitted against a component size AS IF the components were submitted at the Starting Price + Price Increment.

To create a scale profit order with Initial Component

1.  Select the action, Buy or Sell.

2.  Maximum Position - Enter the total order size. Note that this value refers only to the position for this algo order. It does not take into account or affect any current position in the underlying that you may hold.

3.  Initial Component Size - The initial component size refers to the number of units that will be submitted at the starting price, and is used in determining the number of components and price levels needed to achieve the Maximum Position. The component size must be entered in round lots.

Note:  If you do not enter a value in the Subsequent Comp. Size field, this value will be used for both initial and subsequent components

4.  Subsequent Comp. Size - The number of units that will be submitted at subsequent price levels. Must be entered in round lots.

5.  Randomize Size - Check to help ensure the components are not easily detected in the market. Resulting component sizes will be plus or minus 55 percent rounded up or down to the nearest round lot. For a 400 component size, submitted sizes could be 200, 300, 400, 500 or 600.

6.  Starting Price - The price at which the initial component will be submitted. The starting price defaults to the ask, but can be changed directly in the field or by dragging the blue line in the scale chart.

7.  Price Increment - Used to define the price levels for each scale component. The increment will be subtracted from the last price level for a buy order, and added to the last price level for a sell order.

Note:  The number of components along with the Starting Price and Price Increment are used to calculate the Bottom Price, which is the lowest price at which any of the order components will be submitted. If you change the Bottom Price, the Price Increment is recalculated.

8.  Check Create profit taking order, and enter the profit offset.

Once the price increment has been entered, the Top Price is calculated, and will be higher than the starting price by the price increment times the number of component sizes higher the initial price is compared to the subsequent component size. in the above example, the initial size is one component size larger than the subsequent size, so the calculation is 1 x .02 = .02. The top price will be .02 (or one price increment) higher than the starting price.

For an example of how a scale profit order with a larger initial component will behave, see Example 3: Scale with Profit and Initial Component size.

Important Disclosures