Pyramiding into a trend

[OddTrader]

Quote from Maverick1:

Success with pyramiding is conditional on the entry system

... and probably exits, timeframe, etc.

 

[Maverick1]

Quote from OddTrader:

... and probably exits, timeframe, etc.

entry system is actually a misnomer, you are correct

what I meant was the trading method

All that matters tremendously, that is the entry point, exit, timeframe, time in trade etc etc

 

[OddTrader]

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.

For trading with very short timeframes, which probably you do as mentioned by your previous handle/ posts, the above research results would be, I think, a very solid and sound conclusion.

 

[forex_king]

Pyramiding is as old as the sphinx, since the days of the pharoahs no one has pyramided successfully.....

Just kidding.....

To see if pyramiding is a esstential part of your trading backtesting would be a good way to find out....Pyramiding excessively can occur bigger drawdowns, but once a trend is going your way hugh profits can be produced but finding a trend and riding it out is a different story...because any drawdown bigger than 40% can make a person stop pyramiding....find out what is your tolerance level for drawdowns because only you can answer that question.....

 

[Maverick1]

Quote from OddTrader:

For trading with very short timeframes, which probably you do as mentioned by your previous handle/ posts, the above research results would be, I think, a very solid and sound conclusion.

The comment above might not hold across all styles, even when short term trading

Listen, you gotta ask yourself the following question:

To succeed at this given my trading personality, is it more important to my proper execution that I:

1) Be more right than wrong?

or

2) Be right more than wrong?

 

[MAESTRO]

Quote from OddTrader:

For trading with very short timeframes, which probably you do as mentioned by your previous handle/ posts, the above research results would be, I think, a very solid and sound conclusion.

You are very observant. Yes, we did conclude it from the short term trading stand point of view.

 

[OddTrader]

Quote from forex_king:

....find out what is your tolerance level for drawdowns because only you can answer that question.....

Quite right, it's a very important factor to consider, for how much heat we can bear psychologically when encountering adverse movements.

 

[OddTrader]

Quote from Maverick1:

The comment above might not hold across all styles, even when short term trading

Listen, you gotta ask yourself the following question:

To succeed at this given my trading personality, is it more important to my proper execution that I:

1) Be more right than wrong?

or

2) Be right more than wrong?

Without good timing/ sizing for entries/ exits, pyramiding would be (probably very) risky.

With (truly) good entries/ exits, why would we need pyramiding?

 

[MAESTRO]

Quote from OddTrader:

Without good timing/ sizing for entries/ exits, pyramiding would be (probably very) risky.

With (truly) good entries/ exits, why would we need pyramiding?

Exactly! That is why all of our traders are advised to "rethink" the entries rather than simply add to them. This way you would have a better capital usage and very tolerable drawdowns.

 

[Maverick1]

Quote from OddTrader:

Without good timing/ sizing for entries/ exits, pyramiding would be (probably very) risky.

With (truly) good entries/ exits, why would we need pyramiding?

You summarize the conundrum indeed my friend...
Think hard about it. It's almost a mathematical riddle. And don't fall into the trap of believing that since others have tried and not found any satisfactory answers, you won't either.