Pyramiding

P

pkts

The weakest area of my trading is my failure to utilize pyramiding. How do you guys use the strategy?

I know that you supposed to add less contracts (compared to your opening position) as you pyramid but I have no idea how to analyze where to buy the additional positions. It seems some buy at arbitrary points (like up 3%) but that seems foolish. Wouldn't you want to see some support on the charts?

What do you do if the price just keeps going up without pulling back to build support? Or do you buy based on penetration of previous support/resistance?

EG. I was in Soybeans from the beginning of the move but never added any contracts because it was straight up....almost. With hindsight I could have added at 5.60 and 5.90 on the NOV contract based on minor pullbacks.

Thanks for any thoughts!
 
If you really want to study and apply the concept, it would be a good idea to start here:

Turtle trading system
http://www.elliottgann.com/en/index.php/Turtle_trading_system

But don't just half-read the system, study it and know it inside/out and be sure that you have the psychology in place to apply it correctly.

Then give it your shot (I personally don't use it, but I like to trade intra-day, scaling into the majority of my position at the begining of the trade).

Best Regards,

Jimmy Jam
 
Thanks a lot Jimmy Jam!

I've read about Dennis is the Market Wizards book. Didn't realize the info was on the net!
 
Quote from pkts:

Thanks a lot Jimmy Jam!

I've read about Dennis is the Market Wizards book. Didn't realize the info was on the net!
More...
Just about everything is ... :D
 
Doesnt pyramiding only work in trends...which admittedly we are in now.

If the market bounces around rather than dropping like a rock before an inevitable turn.....wont you be buying the additional contracts right before they drop?
 
Hi,

Try adding positions only when the price retraces away from your signal/entry. Yes it's going against your position....
Instead of adding later when the position is trending in your direction....

This way you enter with say 2 contracts, add 2 more when it goes against your position by enough to pay for the trades plus whatever amount your study concludes is likely to work.

In my case I see retracements where it's safe to add 4 points above the Dow mini entry. It retraces 50% of the time after initial entry and it retraces 4 points 60+% of the time... That's what I mean by study. Look back on your charts and see what works for your entry's.

The nice feature of these second entry's they are closer to your stops so your loss's are smaller then if you entered, then re-entered again further into what was a profitable trend only to have it reverse and stop you out..... For a larger loss....

Does this make sense?

Good trading!
 
You must log in or register to reply here.
Back
Top