scale-up buying

Buying into strength and adding onto that position as prices in the market continues to rise. Scale-up buying involves trading with the trend, using the market’s money to expand the position because there is a smaller risk of a margin call. For example, if a trader buys crude oil at $35 a barrel and the market goes to $36, $1 in profit has been made. The $1 profit is used to purchase more oil. If oil goes up to $37, the trader uses the larger profit to purchase more oil. If the average price now goes to $38, the trader has a $2 profit on a larger position. However, if the market falls, then the trader risks losing money. This term is typically used in the futures market.