In this Letter, we propose a physically enhanced ghost encoding scheme that is realized by exploring optical channel characteristics, i.e., physically and dynamically generated scaling factors. It is found that scaling factors can be physically and dynamically generated to serve as security keys in a ghost encoding scheme, dramatically enlarging the key space and enhancing the security of optical ghost encoding schemes. To the best of our knowledge, this is the first time that dynamic scaling factors have been controlled in the optical path to realize physically enhanced ghost encoding. In addition to the illumination patterns used in optical ghost encoding schemes, the proposed method applies a variable beam attenuator and an amplitude-only spatial light modulator (SLM) to physically generate dynamic scaling factors as keys. Nonlinear variation of scaling factors is achieved in different free-space wave-propagation environments in the proposed method. A series of optical experiments are conducted to verify the feasibility and effectiveness of the proposed physically enhanced ghost encoding scheme. The proposed method could open up new research perspectives in optical ghost encoding.