So there's this strategy called Reverse Scale which is (sorta) the reverse of the usual strategy and is more like "momentum" investing and ...

>Usual strategy?
You know: Buy when the stock is down and Sell when it's up.

>That's buy low, sell high, right?
Yes, but this Reverse Scale Strategy goes something like this:

1. Start with some investment, say $A, when the stock price is, say, Po.
2. Pick some increase, say 30%. Then, whenever the price increases by 30%, buy another $A worth of stock.
3. Continue repeating step #2 every time the stock increases by 30%.
4. Note that there are decision points, namely when these prices occur: (1.3)Po, (1.3)²Po, (1.3)³Po, etc. etc.
5. You Buy $A worth of stock whenever the stock hits such a price.
6. However, if the stock retreats to a previous decision point, Sell everything.

>That's it?
Well, the strategy suggests that, after selling everything, you start with a different stock, repeating the above steps.

>How do you find that "different" stock? Throw darts?
Not at all. There are criteria for selecting stocks.
However, I'd like to talk about a modified strategy.

We stick with the same stock and Sell if the stock retreats by 30% from the last decision price.
Then, after selling everything, we Buy again when the price rises to the next higher decision point.

>Huh? Consider weekly closing prices for GE stock, from April, 1996 to April, 2006. That's a bit over 500 weeks. We start by buying $500 dollars worth of stock at $10.69 ... in April, 1996. We pick some increase, say 30% and identify the magic price targets: 10.69*(1.3) = 13.90, 13.90*(1.3) = 18.07, 18.07*(1.3) = 23.49 and 30.53, 39.69, 51.60 etc. These are shown in red in Figure 1. We add another $500 whenever we exceed one of these. Notice, however, that the price dropped below the last magic Buy price of $39.69 at week 249, so we sold everything.

Figure 1

>And when did you buy back in? Uh ... never. In fact, our portfolio looks like Figure 2. >So you just throw in the towel.? Can't you ...? Hold on! We're not finished yet! We'll modify our strategy a wee bit and ... >And where's the spreadsheet? Comin' soon ... to a website near you ...

Figure 2

In the meantime, here are a few more pretty pics:

>And where's the spreadsheet?
Okay, I now have one and it looks like this:

Click on picture to download the spreadsheet

>Portfolio? Buy? What's ...?
You can start with a Portofolio which is different than the amount of stock you Buy at each Decision Price. In the picture, they're both $500.

>Increase? Decrease? What's ...?
Just in case you want to Sell after a Decrease that's different than one of the prices at which you Buy.
If you make them the same, like 30%, then you get a single set of Decision Prices.
If they're different, the Buy and Sell decision prices are different.

>Is that useful?
I have no idea, but it's fun, no?
>Yeah, right ... so take a bow.