The proper way to pyramid into a position...

Discussion in 'Trading' started by mgregor, Jun 29, 2001.

  1. dozu888

    dozu888

    not sure if we will see NAZ6k in our lifetime :) just look at Nikkei.

    You never know. per Barron's, NAZ fair value is 1200 based on historical p/e
     
    #11     Jun 29, 2001
  2. Wet

    Wet

    Dozu,

    I may be one of those bozos that does feel like there's a difference between capital and open profit! If I can raise the reward of a trade while keeping the risk constant, I'll do it anytime. I don't pyramid often, but when the chance presents itself, I do. If I am playing a retracement, say, and the trade breaks a 52wk high, I pyramid. It is a "new" trade in a way. Now I am banking on the 52 wk high being broken. But I am also banking that the previous trend that I way in will continue, so in a way it is not a new trade.

    Sure the market's money is my money. But as you say there is a certain psychological difference that cannot be denied.

    I don't mind doubling up. But I'd never double down.

    Wet
     
    #12     Jun 29, 2001
  3. limbo

    limbo

    Prae2--I have watched in admiration as you do exactly exactly what you say here and win handsomely. Would you please explain the paint part in very lay terms please. Thanks
     
    #13     Jun 30, 2001
  4. Pyramiding up has never made sense to me. If you don't have enough shares, bite the bullet and play a half position. 90% of the time, the market is in a range. Averaging up only gives you more shares at worse prices (most likely at the top of the range). I like to swing trade. The more oversold it gets, the juicier. So I average down. I have been in some positions down 15k + and not even been concerned. I don't enter large positions unless I'm VERY confident. Paying up just doesn't make sense.
    As for painting the tape, I'm often big enough on my large positions to be semi specialists. I like to make a pretty chart picture. The specialist likes it too. If I'm on the same side as the specialist, we'll work together. I can remember many trades where someone kept putting out 100 shares on island .2 above the offer so I could take them. Then when the offer went up, he'd put out 100 more. He was just hoping I'd take them and make the chart look pretty. Just like when a stock is rising too fast, you often have to sell to slow it down so it doesn't get toppy, but instead consolidates for another half point breakout. I play illiquid things large at times. A 5k roadblock on something trading 300-500k avg daily will do that.
    Look at LAB the day of the reversal. I started the move up. I broke it out of an intraday channel on a 5k market buy. I then showed large sized bids and chased it up a quarter. At that point, the real buyers panicked into it long, and the specialist who was long just moved it ahead of the buyer once he showed his true intentions.
     
    #14     Jun 30, 2001