It's hard to start/continue trading discussions in ET when people without a clue start giving their opinions as if they were long time profitable traders. Pyramiding implies that your position grows over time as your trade works in your favor, this by definition means you add to the winning trade using lesser size than the previous one as it goes along. It's a handy positioning management system because your losers are always small and winners, well, big, some even gigantic. The problem lies in that many times the trader witnesses a winning trade retrace and become a scratch or even a small loss and this creates a psychological hit on the trader. Aside from this the location of every new add is paramount to the success of the trade. ie Just because the trade is working does not mean you will add a long at a higher high. However, the quintessential question then becomes when does one stop ? Surely one must have an end plan or the whole pyramid system can well, collapse wasting all those unrealized profits. Yet over the course of time if you can spot the birth of great trends the payouts make up for the vast majority of the hassle (watching winners turn into scratches time after time); when at the same time it's particularly hard to blow up from too many bad calls because the losses are small (although they could be numerous) and the winners have no real limits. In hindsight pyramiding works best on the strongest of trends, add a little choppiness and you could get faked out just like the newbie next to you; therefore the whole concept of adding to winners is probably only suggested to the traders that are fluent in the language of price. Pyramiding just so happens to be my position management of choice and for the curious most of my winning days are scratches or small losses but once in a while I make that 90 yard pass that makes up for all the hard work. As the saying goes, don't add to losers, add to winners, but as we all know, that's easier said than done. Everything in trading is easier said than done. Hope the info was of service.
i wasn't looking for a definition or do i care about it ... prick didn't feel that a "reverse martin gale strategy" thread title implied strigent requirements as to ones background
In the past there have been some discussions on things akin to pyramiding but more skilled in their trading oriented. AMT4SWA and powergirl come to mind. Your comments do upgrade the conversation greatly. Trading "inside" a position to continue to make money on each of several concurrent cyclic periods may be how the key question you raise can be handled in several parts. Most often the concurrent trading only comes up because of market capacity limitations and the fact that on several fractals within a market, the various fractals may have differing sentiments. Charts only show the end of bar condition except for the forming bar. By examining the cases of adjacent bars, what emerges is the order in which they come into view while a given pair is going through its machinations. This is where the specific timing of the answer to your key question is revealed. It is never at the end of a bar, for example. It is always at the first opportunity. Often people who scale or have partial fills see it in a bilateral way as a consequence of the "first opportunity" aspect. I do not do entry/exit trading so my perspective is very orientd to being on the right side of the market at all times for each trading fractal. And, in John Netto's terms, "one shot, one kill" and "all in". In a series of posts, AMT4SWA, pointed out how he made money on mulitple fractals of one index by independently apportioning capital more or less among the fractals. By lining up a day's trades in advance in the order of their appearance, a trader has a terrific advantage for applying capital at the right place at the right time. A series of trades for each fractal is very logical. Two things are on the table for this: the market pace and the money velocity of the given fractal. Pace is a volume consideration and velocity is a volatility consideration. Both were demonstrated by AMT4SWA.
This is the truth. That said, the typical edge one eventually finds is a method of identifying trends while they still have life left in them. In such a situation, pyramiding can be more profitable than fixed bet sizing. However, when that's the case there's typically a third approach that's more profitable than either.