Pyramiding

[Barbaradak]

Can't find much mention of people pyramiding winning positions, I confess I usually overlook these opportunities, usually only too glad to get out with the profit initially targeted.

But surely, if you can pyramid but don't, aren't you giving away free money?


Maybe we can share experiences -

* How big was your best pyramid, i.e. how many times your original risk capital?

* What are your best pyramid signals?

* How many times do you pyramid a successful position?

* If you're doing this successfully, what's your timeframe?

[baxzepod71]

Your approach sounds rather like mine. Pyramiding always sounds good in textbooks but I find that by the time I'm confident that my stock is on a good run I'm thinking about getting out with the money. My approach is to re-enter if I feel there's still mileage to be had. Also, you can argue that pyramiding is concentrating risk. Mine may well be a flawed psychological approach but that's not what my bank account tells me. Perhaps it's symptomatic of being a fairly short term swing trader – I wonder if pyramiding is better suited to longer timescales?

I'm very interested to hear what other people have got to say on this.

[Barchart.com]

im sure i have a p.mIner text on pyramiding somewhere. if i cacn find it i will post it

[bcar1qyd]

My time frame is the dailies. When I pyramid I only add one single unit, so I could pyramid up to five times before getting to nervous. I look at each pyramid as if it is a new trade that just so happens to be in the same stock, with no connection to the original trade/s other than that earlier trades must already be “safe”.

Pyramiding is especially hard after a loss or two because psychologically after a loss I am desperate to bank profits to make up the unrealised profits I thought I had.

The way I trade is that I always take some profit off the table before the trade is “safe” so when I pyramid I have already made money.
Today I closed down all parts of a trade when I should have left some on, ready to pyramid on the next available opportunity. I messed up. I didn’t follow my rules. I think this is because I recently had unrealised profits go against me, which saw a landmark big round figure in account balance crumble away in front of me. So by closing all parts and neglecting the pyramid I could go into the weekend with the account balance I wanted. What an idiot! I wanted to feel good rather than trade well. I have had great problems lately in trend trading (therefore pyramiding) and have tended to take short term swing exits instead. I need to work out why.

[BekasCMix]

Hi Jason101 - Well I think we've all traded to feel better rather than be better traders. Good insight though and useful pointer towards self-awareness. This is such a mental game.

[admin]

excellent thread and a great question.........

most traders never get anywhere near making money - let alone considering pyramiding and other more advanced trading methodologies to maximise returns ......

as primarily a scalper in forex I don't pyramid in the traditional context .........eg increasing positions in a pair ..........what I do however is pyramid trades based on the usd's direction

so if the usd is rolling bull or bear over perhaps an extended 30min - 2 hour period (like happens most weeks)........I will not hesitate to load in additional/different usd pair trades that will profit from the usd's extended bias.......and let them all run using more traditional trailing stop loss methodologies to cover myself

so technically if the usd went on the rampage I could theoretically have 7 usd pair trades on at any one time ..............GBP,EUR,CHF,YEN,AUD,NZD,CAD ......mainly because currencies (in relative index terms) cycle just the same as any other market so you need to be riding the fastest horses at the best times in the lifecycle of the usd move.....

looking back ive had perhaps 4 max as other dynamics do come into play ..........for example riding all 3 of the European currencies for me in a usd move may be a little excessively overcorrelated re risk/return