Pyramiding into a trend

MAESTRO · Dec 14, 2004

Quote from Maverick1:

Success with pyramiding is conditional on the entry system

Saying that pyramiding doesn't work without defining the entry system against which the pyramiding was tested doesn't seem to be a sound proposition, logically speaking

We have tested a wide verity of entry logics. I did not say that pyramiding does not work. It simply has less efficiency then reentry techniques.

easyguru · Dec 14, 2004

Quote from ElectricSavant:

PRIMITIVE OBSERVATIONS:

Do you pyramid? (adding to a position as it goes profitable)

You first need to identify those instruments that trend well. Then you must enter each stage using stops. Could your stops of the first entry dictate the target of the second entry to achieve BE on the entire position, then exit the second entry and let the first ride? This is just a way to think and there are many ways to take profit from the trend. A trader must find THEIR way.

I was thinking if you could measure the character of an instrument through the ATR indicator, then write down your plan before you make your first entry this might help.

Could you discuss your techniques of how YOU pyramid, not what sounds good, but how you implement this in your trading. For new traders this might go aganst your thinking, but I urge you to examine this closer. Some of my most profitable moments have occured when I have used this technique...

ADVANCED QUERIES:

For you more talented ones, could you share how you think? Do you simply float an "always in" postion and simply look at average price while pulling profit out of the trend? Are you able to use this in the chop environment (Consolidation).

I find myself becoming like a Chameleon and rather contradictory at times. As I look at consolidation which some say is 70% of the time then convert my "thinking" to trend (30% of the time) I find conflicts in my "thinking". Could some more experienced ones share?

As long as there is volatility then you could enter anywhere and turn it profitable...isn't this what trading is? This is why being well capitalized is what its all about. yes cut your losses short and re-enter....try try again...many methods and many ways...

Keeping it simple, sure can get complex

Michael B.

P.S. Please excuse my bad habits. I edit my posts well into the 1 hour limit. I put a lot of thought into what I post and read what I write and reflect. I suggest you do the same...Yes you too DB

I use pyramiding extensively. Over a period of time I have experimented with many things and now settled on few simple rules.
1 There is a pre determined 3 pyramid entries if the first entry becomes profitable within the first 25% of the move
2 After position has 100 % or more profit from initial entry, I again pyramid three times if it has a 60 day breakout on high volume.
After adopting pyramiding three years ago,overall profitability of system has increased substantially. But crux of my system is based on vehicle selection so if my vehicle is right pyramiding allows me to milk the trend much better .

ElectricSavant · Dec 14, 2004

Interesting instead of pattern recognition you let the price tell you.

Currencies would be valid instruments, I would think. (believe it or not the exotic currencies are undiscovered for this) Shhhh..dont tell anybody how those suckers can trend...

Michael B.

I use pyramiding extensively. Over a period of time I have experimented with many things and now settled on few simple rules.
1 There is a pre determined 3 pyramid entries if the first entry becomes profitable within the first 25% of the move
2 After position has 100 % or more profit from initial entry, I again pyramid three times if it has a 60 day breakout on high volume.
After adopting pyramiding three years ago,overall profitability of system has increased substantially. But crux of my system is based on vehicle selection so if my vehicle is right pyramiding allows me to milk the trend much better .

dr_strangecraft · Dec 14, 2004

I am not familiar with the term pyrmiding, but it certainly describes my style.

I am in the market almost constantly, and check it probably 4 - 8 times a day, depending. I keep pretty tight stops, moving them 3 times a day or so; and when a stop for a position has moved beyond its entry point in the profitable direction, I'll usually add to the position.

I use 20:1 leverage, and my preset order size is about 2% of my account.

The signal that I use has been fairly good at indicating changes in the trend on (on a scale of days. I am refining the indicator so it will be accurate to changes in trend that last less than one trading day.)

I trade the eur/usd exclusively, and this style certainly helped me maximize profit. I have been using the current indicator since the beginning of November. In that time, my account now is 14% larger than it was on nobember 5

I would think that pyramiding's success would be dependant on the market (or individual stock) studied. I was surprised that a firm's logician could say categorically that it doesn't work. Particularly in low-cycle commodities like grains (where I got my start), the trend may remain in place for months at a time, when the value doubles or even triples. I'm thinking of corn here.

ElectricSavant · Dec 14, 2004

I eluded to your strategy a little in the opening post. Thanks for sharing. I concur it would be instrument dependant. There are many techniques for pyramiding.

There is a trader AMTSWA that I wish would share in detail his strategy. He is a "floating pyramider" among other strategies, which is fascinating to me...He has an "always in strategy" that he called trades live here, which truly kept me on the edge of my seat...(remember that thread)

Jack Hershey had a technique like this...But I do not know if he is still around and what handle he is using. Ok, he is controversial, so lets not go there. Lets justs pull the good stuff out of everyones posts..

Michael B.

Quote from dr_strangecraft:

I am not familiar with the term pyrmiding, but it certainly describes my style.

I am in the market almost constantly, and check it probably 4 - 8 times a day, depending. I keep pretty tight stops, moving them 3 times a day or so; and when a stop for a position has moved beyond its entry point in the profitable direction, I'll usually add to the position.

I use 20:1 leverage, and my preset order size is about 2% of my account.

The signal that I use has been fairly good at indicating changes in the trend on (on a scale of days. I am refining the indicator so it will be accurate to changes in trend that last less than one trading day.)

I trade the eur/usd exclusively, and this style certainly helped me maximize profit. I have been using the current indicator since the beginning of November. In that time, my account now is 14% larger than it was on nobember 5

I would think that pyramiding's success would be dependant on the market (or individual stock) studied. I was surprised that a firm's logician could say categorically that it doesn't work. Particularly in low-cycle commodities like grains (where I got my start), the trend may remain in place for months at a time, when the value doubles or even triples. I'm thinking of corn here.

Maverick1 · Dec 14, 2004

Quote from ElectricSavant:

Without revealing what was shared with me in a PM, as I have no right to claim these are my thoughts.

BUT....

trend must be identified in stages...I knew this. But it has been shared with me that it is a tradable valid methodology to use different methods for different stages (the chameleon comment).

Now lets not talk too much about Elliot Waves...but I see a connection.

Michael B.

Without going into a lot of detail, the above makes a LOT of sense

science_trader · Dec 14, 2004

Quote from MAESTRO:

We have a staff scientist in our company that was assigned to this task. He used quite sophisticated tools and spent about half a year testing diff. pyramiding strategies. We needed it for our own fund. His recommendations were:

1. Do not pyramid
2. Do not average.

your 'scientist' should have been able to tell you that in about 1 day, just observing some basic probabilities on your strategy. I hope you don't pay him too much...

ElectricSavant · Dec 14, 2004

The goal of this thread has been met. Are you folks thinking now, I am...

Michael B.

OddTrader · Dec 14, 2004

Quote from ElectricSavant:

trend must be identified in stages...I knew this. But it has been shared with me that it is a tradable valid methodology to use different methods for different stages (the chameleon comment).

Very interesting indeed, would you mind to explore the ideas further and share with us?

bali_survivor · Dec 14, 2004

Quote from OddTrader:

Very interesting indeed, would you mind to explore the ideas further and share with us?

Oddtrader,

We may be out of luck.

Me expects that ElectricSavant is honoring someone's PM and is not saying much more.

Maria