Scale In

Posted in Finance, Accounting and Economics Terms, Total Reads: 161

Definition: Scale In

Scale In is the trade purchase of stocks when the prices of the shares are falling. The Scale In is done to gain from the decreasing prices of the shares and including them in the portfolio.

There is a target price set by the investor beyond which the investor starts to buy the shares when he starts to Scale In. When the price rises he stops buying more number of stocks to prevent losses. The investor has in mind how many number of shares he wants to buy. He starts buying the shares at his target price. He buys in more number of shares as when the price of the stock still falls below target price. He completes his desired total number of shares as the price keeps on falling. And then he stops after his desired number of shares is completed. Therefore it is a kind of progressive strategy. The investor has an idea in Scale In strategy that the price of the stock will rise certainly.

For Example: Suppose a stock is trading at $55, and the investor wants to invest in it. If he wants to adopt the Scale In strategy, he will set a target suppose of $50. Now if the total shares he wants to buy is 1000. He will buy some shares say 400 at $50. Next 400 when more price drops and next remaining 200 shares when still more price drops. This is the Scale In strategy.


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