An order (buy or sell order) that is placed by an investor seeking to establish or offset a position by buying or selling futures contracts (long futures or short futures) at pre-defined price level intervals. This order helps investors establish or liquidate a position at an average price (across the multiple intervals) rather than confine themselves to the execution of the whole order at a market price in cases of unfavorable market movements.
For example, an investor may place a scale order to buy one contract on a specific market index at prevailing price level, March delivery, and to buy 9 additional contracts every 10 points lower. If the market price at the contract date is 1500, then the investor who already bought one contract will buy one additional contract every 10 points until the total number of contracts (1+9) has been purchased. In this specific case, the investor will buy an additional contract at 1490, 1480, 1470, and so on.
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