Pyramiding.
DEFINITION of 'Pyramiding'
A method of increasing a position size by using unrealized profits from successful trades to increase margin. Pyramiding involves the use of leverage to increase one's holdings by making use of an increased unrealized value of current holdings. Since the use of leverage is involved, this is a riskier strategy than one which only makes use of cash to purchase securities.
BREAKING DOWN 'Pyramiding'
An investor who is pyramiding uses excess margin from the increasing price of a security in his or her portfolio to purchase more of the same security. This is generally a slow method of increasing one's position size, as the margin increases will permit successively smaller purchases. Additionally, whether the pyramiding involves only a single security or a few securities, the risk of a portfolio concentration increases with each level of the pyramid.
Pyramid Your Way To Profits.
Pyramiding involves adding to profitable positions to take advantage of an instrument that is performing well. It allows for large profits to be made as the position grows. Best of all, it does not have to increase risk if performed properly. In this article, we will look at pyramiding trades in long positions, but the same concepts can be applied to short selling as well.
Misconceptions About Pyramiding.
Pyramiding is also not that risky - at least not if executed properly. While higher prices will be paid (in the case of a long position) when an asset is showing strength, which will erode profits on original positions if the asset reverses, the amount of profit will be larger relative to only taking one position.
Pyramiding is also beneficial in that risk (in terms of maximum loss) does not have to increase by adding to a profitable existing position. Original and previous additions will all show profit before a new addition is made, which means that any potential losses on newer positions are offset by earlier entries.
Also, when a trader starts to implement pyramiding, the issue of taking profits too soon is greatly diminished. Instead of exiting on every sign of a potential reversal, the trader is forced to be more analytical and watch to see whether the reversal is just a pause in momentum or an actual shift in trend. This also gives the trader the foreknowledge that he or she does not have to make only one trade on a given opportunity, but can actually make several trades on a move.
For example, instead of making one trade for a 1,000 shares at one entry, a trader can "feel out the market" by making a first trade of 500 shares and then more trades after as it shows a profit. By pyramiding, the trader may actually end up with a larger position than the 1,000 shares he or she might have traded in one shot, as three or four entries could result in a position of 1,500 shares or more. This is done without increasing the original risk because the first position is smaller and additions are only made if each previous addition is showing a profit. Let us look at an example of how this works, and why it works better than just taking one position and riding it out.
We could buy our 500 stocks and hang on to them, selling them whenever we see fit, or we could buy a smaller position, perhaps 300 shares, and add to it as it shows a profit. If the stock continues to trend, we will end up with a larger position (and thus more profit) than 500 shares, and if the stock falls we only lose money on 300 shares - a loss of only $165 ($0.55*300) as opposed to $275 ($0.55*500) if we only took a static 500 share position.
Now, let's take a look at an example using a 15-minute chart of the Great Britain pound against the Japanese yen (GBP/JPY). The circles are entries and the lines are the prices our stop levels move to after each successive wave higher.
In this case, we will use a simple strategy of entering on new highs. Our stops will move up to the last swing low after a new entry. If a stop price is hit, all positions are exited. Our entries are 155.50, 156.90, 158.10 and 159.20 as we add to our position with each successive move to new highs after a reversal. The latest reversal low gives us an original stop of 154.15 and then progressively 155.50, 157.00, 157.50. Finally, we have a reversal and the market fails to reach its old highs. As this low gives way to a lower price, we execute our stop at order at 160.20, exiting our entire position at that price. (For more, see Is Pressing The Trade, Just Pressing Your Luck? )
Problems With Pyramiding.
Another issue is if there are very large price movements between the entries; this can cause the position to become "top heavy," meaning that potential losses on the newest additions could erase all profits (and potentially more) than the preceding entries have made.
Pyramid Trading Strategy (Double Your Profit Potential)
The Forex pyramid trading strategy you’re about to learn will greatly increase your chances of making consistent returns as a Forex trader. It can literally double or even triple your profits on a single trade.
But as profitable as pyramid trading can be, it can be just as damaging if used improperly. Which is why I wanted to take some time today to walk you through exactly how I use this strategy to double my profit potential.
By the end of this lesson, you will understand the pyramid strategy inside and out. You will be familiar with the dynamics behind the strategy as well as the mechanics that make it so profitable. But most importantly, you will know how to double or even triple your profits on a single trade .
Before we get into the technical side of things, it’s important to first understand the basics of pyramiding.
What is Pyramid Trading?
Pyramid trading is a strategy that involves scaling into a winning position. In other words, strategically buying or selling in order to add to an existing position after the market makes an extended move in the intended direction .
When you’re right – you need to be really right, and when you’re wrong – you need to be a little wrong. This has to be your mentality if you ever wish to become a consistently profitable Forex trader.
Pyramid trading fits perfectly into this mentality because it compounds your winning trades into two or three times the initial profit potential while reducing your overall exposure.
Therein lies the best part about pyramid trading – if done properly, you aren’t exposing yourself to any additional risk. In fact, you are actually mitigating your risk as the trade moves in your direction.
The illustration below shows the basic idea behind pyramiding.
The illustration above shows a market that’s in a clear uptrend, making higher highs and higher lows. This is a nice “stair step” pattern where the market is continually breaking resistance and then retesting that resistance as new support. Market conditions such as this are ideal for scaling into a winning trade.
The initial buy order in the illustration above is triggered when the market retests former resistance as new support. The second and third buy orders are similar to the first, which are both triggered when the market retests a former resistance level as new support.
Keep in mind that the market has to break through each level and then show signs of holding in order to justify adding to the original position. This is why having a strong trend in place is a requirement for effective pyramiding.
Now that you understand the basics of pyramiding, let’s get into the mechanics behind pyramid trading as a strategy.
Forex Pyramid Strategy: How to Double or Even Triple Your Trading Profits.
The key to successful pyramiding is to always maintain a proper risk to reward ratio, which says that your risk can never be greater than half the potential reward. So if your profit target is 200 pips, your stop loss must be no greater than 100 pips. This achieves a 1:2 risk to reward ratio, also known as “2R”.
Let’s take a look at another illustration, only this time we’re going to apply position sizing and a proper stop loss strategy.
Using a hypothetical $20,000 account, we would buy 40,000 units (4 mini lots) on a retest of each key level. The profit target for each position is varied, while the stop loss for each new position is 100 pips.
Let’s run through this example starting with the initial buy of 40,000 units. For example purposes, we’re going to assume that the market represented above is in a strong uptrend, so momentum is on our side.
The market breaks through a level of resistance, and upon retesting the level as new support you notice a bullish pin bar, so you buy 40,000 units (2% risk) You decide you’re going to let this trade run because again, you’re trading a market that’s in a strong uptrend The market breaks through the second resistance level and again retests it as new support You notice the market holding above the new support level so you decide to buy 40,000 additional units and trail your stop loss behind the second position Once more, the market breaks through a key level and retests it as new support Seeing the continued strength, you decide to buy another 40,000 units and trail your stop once more behind the third position.
That’s a lot of buying! At this point you have built up a fairly large position size of 120,000 units at risk. Or is it? The total position size is in fact 120,000 units, but how much of that is actually at risk ?
Nothing! In fact by the time you add the third position of 40,000, the worst case scenario is that you make a 6% profit .
What’s the profit potential if the market travels another 200 pips after buying the third block of 40,000 units?
How’s that possible, you ask?
Let’s crunch some numbers to find out.
The Mechanics Behind Pyramid Trading.
Now that you have a good understanding of the dynamics behind pyramiding, let’s dig a little deeper and find out why it’s such a profitable strategy.
The illustration below shows the previous example, only this time we’re including the profit potential along with the risk profile of each entry.
This is where the real magic happens. Notice how the profit potential for each additional position is compounded throughout the trade, while the risk is continually mitigated.
The initial entry would have resulted in a 12% profit, which is considerable on its own. However, by pyramiding, we were able to double the profit on the same trade while reducing our overall exposure.
Let’s take a look at the best and worst-case scenarios for each step of this trade.
First block of 40,000 units.
Worst case: 2% loss.
Best case: 12% profit.
Second block of 40,000 units.
Worst case scenario: Break-even (+2% from the first block and -2% from the second)
Best case scenario: 20% profit (+12% from the first block and +8% from the second)
Third and final block of 40,000 units.
Worst case scenario: 6% profit (+6% from the first block, +2% from the second and -2% from the third)
Best case scenario: 24% profit (+12% from the first block, +8% from the second and +4% from the third)
As you can see from the figures above, the worst case scenario at any point in the trade is a 2% loss, while the best case scenario is a 24% profit . This makes pyramid trading not only extremely profitable but vastly more favorable compared to most other trading strategies out there.
Conclusion.
Pyramid trading can be an extremely advantageous way to compound your profits on a winning trade. However, it isn’t without caveats and it shouldn’t be used excessively. If you find yourself trying to scale into more than one trade per month, there’s a good chance that you aren’t being selective enough about which trades to scale into.
Knowing when to use pyramiding takes a great deal of practice, just as the proper execution takes no small amount of planning. But the potential profit is well worth the time and effort.
Last but not least, don’t get greedy . It’s far too easy to fall into the trap of thinking that the market isn’t going to reverse on you. Remember, markets ebb and flow. Even the strongest trends experience pullbacks to the mean.
Have an exit plan outlined before entering the first trade in a series.
This allows you to define your plan while in a neutral state of mind. If you wait until you’re in a trade before defining an exit plan, there’s a good chance your emotions will get the best of you.
Here are a few things to keep in mind when using the pyramid trading strategy.
Only use the pyramid strategy in a strong, trending market Always define your support and resistance levels before entering the trade (plan your trade and trade your plan) Know your exit plan of where you want to book profits before entering the first trade Maintain a proper risk to reward ratio at all times Trail your stop loss behind each new position in order to mitigate your exposure Keep things simple by using the same position size for each block of buying or selling Don’t get greedy – stick to your plan no matter what.
Above all else, just remember to use pyramiding sparingly. This isn’t a technique you want to use on every trade or even every other trade.
But if you can catch just three or four pyramided trades per year, you’re looking at a profit potential of 60% to 80% from a mere handful of trades. Combine that with the fact that you’re only risking 2% each time, and you have a strategy that is as favorable as it is profitable.
Do you currently scale into winning trades using something similar to the pyramid strategy covered in this lesson? If not, do you think pyramiding is something you will use for future trades?
Leave your answer in the comments section below.
Since you’ve closed the comments to your risk/reward article, I’ll comment here since you linked to it. I’d like to see you revisit that article after doing some Monte-carlo simulations which will show that trader B with a 1:1 risk reward is actually the far more favorable option, will likely win much more, and have far better draw down characteristics. The scenarios you ran through are unrealistic and the math is incorrect, or I should say overly simplistic to the point of being misleading, because it doesn’t account for randomness when position sizing is a percentage of the account rather than a fixed $100 bet.
As you increase R:R, you win rate decreases and your loss rate increases and your possible outcomes, when randomness are factored in, get terrible. At the very least, one must consider the best and worse case scenarios to get an idea of the range or possible equity curves. Say you win 50 out of 100 trades. Figure out the equity curve of the best case, all the wins first then all the losses in that order, and the worst case, all the losses first and then all the wins. Both scenarios betting 2% of the account with a 1:2 risk reward; this should make clear that the order of wins and losses which is completely random matters a great deal with any R:R over 1:1 which in the end makes your result subject to massive luck. Do the same with 1:1 and you’ll see it’s the better approach.
Wow, did you really just delete my comment about risk reward? I’ve always found you very reasonable and love your articles, can’t believe you’d just do that.
It was removed for being off topic. If you have questions about a lesson or article where the comments section is closed, feel free to contact me via the “contact” page.
OK, that’s a valid reason, however, would you mind addressing the comment or re-opening the comments on the risk reward article; I find it an interesting place where retail traders follow myths instead of math. Math says 1:1 is better than 1:2.
Nice post, thank you for share.
You’re welcome. Glad you enjoyed it.
Glad to hear it is working out for you. Thanks for sharing.
Not yet. But I will after reading this most useful explanation.
Great advice Justin.
I get it, it must be used regarding the big picture. Like a Head and Shoulders pattern appears on a high TF like weekly or daily and the TP Target is far enough to add positions in between..
Olivier, absolutely! It’s all about maximizing gains and minimizing risk.
Well written Justin, but I have only one issue with this which is the first position’s profit is not protected. I’ll explain how I pyramid my trade.
I initially define my risk say $100 for example. I divide it into 2 trades which is $50 risk per trade. I take the 2 trades at the same price as my first trade and let one of them run to 3x my risk which gives me $150 and leave the other open to catch larger move. After this, I wait to see if there’s going to be any chance to take the 2nd trade for me to now pyramid, risking from the market’s money ($150 already keyed in). On the second trade, I risk $100 out of the $150 initially gained and move my SL to the new higher low if i’m buying or Lower high if otherwise. By so doing, I pyramid by using the market’s money. Pls pardon my English. Good to know you website. Thanks.
Lakeside, thanks for sharing. However, the initial position is in fact protected as I always trail my stop loss.
Thanks Justin. Keep up the good job!
Thank you for another great article. I had a question to run by you regarding pyramiding with EMA’s. I’ve become very interested in scaling back the number of trades I make a month and trying to catch a handful of really good winners, thus the idea of pyramiding a position really intrigues me. On that same note, I have noticed that in addition to Support and Resistance levels (like you) I am a big believer in the 10/20 EMA levels for strongly trending pairs. I was curious if you have ever experimented in pyramiding a trade according to pullbacks to the 10/20 EMA rather than key S/R levels and what your over all thoughts are on a strategy like this?
Thanks again and have a great weekend!
Sal, I don’t typically use the 10 and 20 EMAs in this manner. I’d say 90% of the time I only use them to gauge the location of the mean.
i have tried scaling into trades lately. Its yet another strategy I am working on.
Hi Stephen, if done correctly, pyramiding is an excellent way to increase trading profits without increasing your risk.
Pyramid is so useful and profitable strategy. I must use this.
Tauqeer, pyramiding has worked out extremely well for me over the years. Let me know if you have any questions.
Hi Justin, thanks for the tip! I was wondering, how did you calculate 2% for the risk? I understand the “R”s part from your risk/reward ratio article but I’m not sure about the 2% part. I initially thought it would be 1% instead because of a 1:2 ratio? Would you be able to clarify?
Hi how are you today.
I would love to know ur strategies please thank you.
Great, but how can we compare with the sentiments in the news,. As a beginner am having problem of locating, y take profit, stop loss etc.
That’s an entirely different topic. Feel free to browse the website. I’ve written about all of those previously.
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Pyramiding – A Money Management Strategy To Increase Profits.
In today’s lesson I am going to teach you guys how to “trade with the market’s money”. That’s right, I am going to show you how to scale in or “pyramid” into a winning trade, without taking on more risk . This essentially means you will add to an open winning position without taking on more risk and possibly even creating a risk-free trade, all while dramatically increasing your potential profit. It’s not too good to be true, but there are certain times when scaling into a trade works better than others, which we will discuss in today’s lesson. ( Note: scaling in is the same thing as adding to a position or pyramiding in)
You’ve probably heard the saying “Cut your losers short and let your winners run”, but how do you actually do that ? Today’s Forex trading training lesson is going to teach you how to properly scale into an open trade that’s in profit, so that you get the most out of your winning trades. You probably know that many of the major Forex pairs have been trending quite nicely recently, if not, then check out my recent Forex market update to learn more. With all these strong trends that are taking place recently, I thought it would be good a idea to chuck out an article to you guys about how best to maximize your winning trades. So, let’s get started….
Note: When you finish reading today’s lesson, please leave me a comment and let me know if you found this information helpful!
How to safely scale in or “pyramid” into a winning trade.
Note that I have “safely” in italics above, that’s because there are basically two ways that you can add to a winning open position:
1) The stupid way – Scaling into your position but not trailing your stop up or down to reduce risk on the previous position(s), thereby voluntarily taking on more risk (something you should NEVER do).
2) The smart way – Scaling into your position at predetermined levels and trailing your stop up or down each time you add a new position so that you never risk more than you are comfortable with losing, or more than what you have predetermined is a good 1R value for you (1R = the amount you risk per trade).
I am going to teach you guys how to safely pyramid into your trades today, but before we get started I need to stress one thing:
WARNING: Just because you can scale into an open position that is in profit doesn’t mean you SHOULD. There are certain times when the strategies you are about to learn will work well and certain times when they won’t. In general, you can try to scale into a winning position when a market is in a strong trend or during strong intra-day moves. You should not try scaling in when the market is range-bound or trending in a choppy manner with a lot of back and filling.
Now, because you are adding a new position each time your current trade moves a certain distance in your favor, your breakeven point on the whole position moves closer to the market price. This means the market doesn’t have to move as far to put you into negative territory. Now, this won’t be a problem if you have trailed your stop loss on the previous position(s) so that you maintain your overall 1R risk, but where traders get into trouble is scaling into positions and not moving their stop losses to reduce risk. If this all seems a little confusing right now I promise the diagrams below will clarify…
Let’s say the EURUSD is trending lower like it has been recently. You see a solid pin bar entry strategy that formed showing rejection of the 1.2625 resistance level. You decide that since price has respected this level and it’s obviously a “key” level, it’s a good place to set your stop loss just above. So you decide to put your stop loss for the trade at 1.2650….we ALWAYS set our stop loss BEFORE deciding on a potential profit target. This is because risk management in Forex trading is the most important aspect of the whole thing…if you don’t properly manage your risk on EVERY trade you WILL NOT make money.
Next, there is no obvious / significant support that you can see until about 1.1900, so you decide to aim for a larger profit on this trade and see if the trend won’t run in your favor a bit. Your pre-defined risk on the trade is going to be $200, to keep the math simple let’s say you sold at 2 mini-lots at 1.2550; 100 pip stop loss x 2 mini-lots (1 mini-lot = $1 per pip) = $200 risk.
You decide to aim for a risk reward of 1:3 on this trade, so you set your initial target at 1.2250 and you plan on adding two positions to this trade, 1 when you are up 100 pips and another when you’re up 200 pips. You plan on doing this because the market is trending strongly and you have decided based on your discretionary price action trading skills that there’s a good chance the trend will continue.
Here is a diagram of what your trade looks like at the beginning:
The trade pushes on in your favor and you decide to scale in with another 20k units at 1.2450. Your overall position size is now 40k or $4 per pip on the EURUSD, this increases your potential reward to $1,000 if price hits your target at 1.2250. Since you trailed down the stop on your initial position to 1.2550, that position is now at breakeven, the stop on your new position is also at 1.2550, meaning your overall risk on the trade stays the same at $200.
Next, the trade continues on in your favor and you decide to pyramid in with another 20k units at 1.2350. This means your overall position is at 60k or $6 per pip on the EURUSD. Your overall reward potential is now $1,200 if your target of 1.2250 gets hit; note that your reward is now double what it was when you started whilst your overall risk is now at $0 as you’ll see now…
You trail down the stops on both previous positions to 1.2450 thereby locking in a profit of $200 on the first position, reducing the second position to breakeven and offsetting the $200 risk on your new position to $0…you now have a breakeven trade. The catch here is that the market is only 100 pips from your breakeven point on the whole trade, so there’s a bigger potential of the whole position getting stopped at breakeven…the good part is you have increased your potential for profit without taking on any more risk.
The trade continues on in your favor and hits your target at 1.2250, all three positions are now closed and you’ve netted a 1:6 risk : reward. You never risked more than $200, which was your predefined 1R risk amount, and you gained $1,200. This is an example of how to take advantage of a strong trending market like we have seen recently in the EURUSD and other markets.
I am sure that some of you are probably wondering about scaling out. I am not going to get into it too deep in today’s lesson, but if you want to read a previous lesson I wrote that discusses scaling out, check out my article on forex trade management.
I will say this: I don’t scale out, and I don’t recommend you do either. But, obviously what you do in the markets is up to you, however, I will briefly explain to you why I personally believe scaling out makes no sense. When you scale out of a trade you take partial profits on your full position as the market moves in your favor. Sounds good on the surface right? Well, the problem with it is that you are limiting your gains on a winning trade. We want to maximize winning trades, not minimize them. What I am saying is that by scaling out you are purposely limiting a winning trade.
You see, when you scale out of a trade you are cutting down your position size as the trade becomes more profitable by moving further in your favor. What this means is that as the trade moves in your favor you’re going to be holding the smallest portion of your position at the MOST profitable part of the trade…doesn’t seem like the best way to let your winners run does it? Remember…trading is about maximizing your winning trades and limiting your losers…I only see scaling out as minimizing a winner, and THAT is why I don’t scale out.
I prefer to either take a predetermined 1:2 or 1:3 profit on a full position or IF the market is trending strongly like I discussed above in the diagrams, I will try to scale in. Either way I am not minimizing my winning trade like I would be if I were to scale out. So, to be clear, I either take profit on my full position at my predetermine target level, or I scale into a trade that’s in the context of a strong market trend….what I don’t ever voluntarily do is minimize a winner by scaling out!
Final word on adding to winners…
Finally, I just want to stress again that you should not try to scale into EVERY trade that goes into profit. You need to decide BEFORE you enter a trade if you think it has the potential to run in your favor; you need to decide before you enter if you are going to add positions to a trade by scaling in. You don’t want to leave anything to chance, and you want to make as many decisions as possible before you enter the market, since that’s when you’ll be the most objective and logical.
Take note of the EURUSD and some of the other major Fx pairs over the last 3 to 4 weeks (as of May 31st 2012)…these are the types of market conditions that give us good potential to try and add to a winning trade. Note that these market conditions don’t happen extremely often, but I wanted to teach you guys that you can add to a trade without taking on any more risk…and that was the point of today’s lesson. If you want to learn more about how I trade with simple price action strategies and my overall trading theory, check out my Forex trading course and members’ community.
Good trading, Nial Fuller.
I WOULD LOVE TO HEAR YOUR THOUGHTS, PLEASE LEAVE A COMMENT BELOW :)
About Nial Fuller.
How To Trade Key Chart Levels in Forex.
How To Increase The Winning Probability Of Your Forex Trades.
Know When to Hold ’em – Know When to Fold ’em.
How To Start Profiting With Price Action Trading Strategies.
Why The Best Trading Plan Is Built Around Anticipation.
6 Tips On How To Identify The Trend On Charts.
120 Comments Leave a Comment.
Hi Nial. Thank you for the very informative article. Do you stay on the daily chart when watching for retracements to scale in on your position/s or do you move to the 4Hour chart (move between the daily and the 4Hour chart)?
Congratulations on the competition. all your explanations are always on point and simple and easy to understand. im glad i subscribed to your newsletter ive grown so much as a trader from the day i started reading your trading course and newsletter.
Great Info Nial, thank you for sharing. Wish you more success!
Thanks Nial. A great article on something I struggle to get right.
Congrats Nial on your awesome 369 % performance in the 3 month competition. Showed me how much I have yet to learn. I will keep trying though and today´s article is a road arrow in that direction.
Your name Nial(in Icelandic: Njall) is also the same name that the leading figure in the most celebrated story in the Icelandic saga´s, the “Niala”(Njala), carried. This person was known for his intellect and gift of foresight and all his friends sought his advice on major matters. Even that was not enough since his enemies burned his house to the ground with him and all his family inside. Maybe you should read it. one day, even if it tells of distant events that happened over a thousand years ago. The author is not known but he could not have written this saga had he not had first hand knowledge of these events that took place in the tenth century in Iceland around the advent of Christianity and Leif´s Ericsson´s discovery of America in the year 1000 A. D.. I could try to get you an English version of this if it is not in your book store.
Life in those days was not unlike trading. He who was better at risk management might survive when others might loose. You do carry the name Nial with full honours. I have enjoyed your lessons and I am always picking up bits and pieces in the articles. One day I hope I will become a better trader and then the lesson today will contribute to that.
Humbled by the comments Halldor, thank you.
This was really cool Nail. Before My understanding was to take more trades to earn more. How can I earn more by taking less trades?
thank you, your explanation and diagrams are very clear.
Great article as always.
Thanks Nial. You have a way of putting complex concept into bite sizes for people to understand. I am a recent member and really love your articles and your training video. Thanks!
Great lesson and has helped me see the overall “Edge” of scaling in when a Trending market/trade is identified.
Thank you again.
Good lesson. Helpful to new trader like me. Thanks.
thank you sir you are a good forex teacher i liked all your articals so thank you for your effort s & take care.
Thanks Nial. Wonderful artical.
thank you nial for a great lesson.
Nial, this is a trading lesson that holds everything together. Thanks.
Dear Nail, Thanks for the very objective lesson.
Actually the more I read and dip down into your trading lessons , the more I realize how it is important to back up your self with such useful, great and highly skilled educational materials.
Happy new year to you and to all our member community and hopefully 2014 will be great for all of us.
This article is very helpful. It gave me a clear understanding on how to scale in positions without increasing your risk.
Great topic for a video (hint, hint). And the last step for me to master. Thanks Nial.
Like it so much.
Loved that lesson really help full to reduce exposure and increase gain.
Thanks Nial for teaching such a good technique……i am newbie trader and love to learn…….Thanks.
Thank you so much coach. That is new skill which i would training hard. :)
Very interesting! Never really thought about scaling out in this way… Always thought it was a way to “lock in profits”, but I can see the benefit of NOT doing it. Thanks for that!
This article was extremely helpful. I have heard of scaling in and out a number of occasions but didn’t know how nor did I have enough experience to try it. Now, with your easy to follow Pyramiding article, I can say that I understand the environment on which to scale in a position and no real reason to ever scale out of a position. Excellent…Many Thanks to you Nial.
This is a very helpful article to me as I only scale in when a trade goes against me, but this Pyramiding article opens my eyes on how to properly adding position WITH the TREND not AGAINST the Trend. Thanks Nial.
Hi Nial, Your information always very helpful, sincerely, thanks for that!
I can’t tell you just how grateful I am that I came across your website. I am currently “pyramiding” a long term long position on the usd/jpy since the 80.00 level, then did another level at the 84.00 and just did a third “step” at 87.50… amazing!! I plan to do a fourth when i get a daily pinbar break above the 90.00!!
This is the first article I find on the matter which makes crystal clear explanation. Bravo, Nial!
the final jigsaw just fell into place. thanks nial, all the trading pieces are now complete. bravo! master.
Pyramiding is about re-investing existing paper profits as you ride your winning trade.
Each time you should reinvest less because leverage increases, so 75% should be a good number to aim for.
Also use a trailing stop which is a no-brainer.
Pyramiding = key to ammasing forex wealth.
A 21k trade could easily end up being 120k profit just by reinvesting your profits and adding positions every X pips. (determined by your trade and entry lots)
This is very helpful. easy to follow and understand. thanks for sharing this lesson.
Great article. Thank you for sharing your knowledge with us.
That’s great tutorial. I’m very new to trading and i would hope to learn more from you.
very good information.
I like it very much.
Great lesson and easy to follow too, thanks.
there is yet to be an incisive piece. nail, you did it again. thanks.
Great lesson indeed. But as I have been wounded several times in Fx market, I don’t think that I can scale now. I prefer take the smallest profit and get out of the trade.
Really love this article, easy to understand and you always seem to emphasise the common sense approach. Love it! K.
thanks, will make more now than scaling out.
good one, Nial. i’ve yet to come across an article from you that was’nt great. you’ve helped me become a better trader.
Nice Nial, but I will live this to the pros and continue keeping it simple as one of your article says.
Good article and very clear, thanks Nial!
I think I will practice this technique on demo a few times first though.
Great article as usual. Thanks.
Wise words Nial! Thanks for all your tips!
Really helpful, Nial. Many thanks.
Execllent Lesson Nial. Will take some time to master this.
Great free info – will check this out real time.
Nice one thanks Nial.
Great strategy! It would be very useful for the beginners!
Another fine article. The explanation is simple to follow and understand. I will practice scaling in and let you know how I progress.
thanks for this educative article. Regards Jaroslav.
Hi Niel, thanks for this article. i have been breaking my head over adding on to winning trades since ages. I had success with this approach a couple of weeks back, but last week i made a loss with it. Now i realise its because i didnt maintain well thought out and proper stops. Your guidelines are a big help. Thanks :)
Agree totally on the adding on to positions that show strong trends and break key levels. I have been using this more and more on forex with the day and H4 charts. Too many bozos are preaching scaling out which for me is a disaster zone.
Cheers Nial – keep up the good work.
Good content as usual for inexperienced traders. One thing I could never understand is why would you scale out of a winning trade. I give you 10/10 for your course. It is absolute value for money. Regards Charles.
Excellent – Thank you.
Great lesson once again. Thank you for your insights and willingness to share your knowledge with others.
Fantastic article, I found it to be very helpful..it really does show how to maximize a winning trade. Very simple and easy to understand. Thanks Nial.
As always a great article. thanks.
with ref to scaling out of a trade, i learn’t that by scaling out you reduce your cost position, should the trade go against you, but you only scale out at the next S/R depending on the direction S/L. What are your thoughts on this, i would be interested.
As you have now become a good figure to follow in my trading career I was stuck for 2 yrs but then i came across price action. AMAZING, its’changed everything. Thank you nial.
hi nial, thx for great article.
i think your article good for trending market, but no effect for sideway market.
so if i apply your method, i think i will add 10k at 1.2450 and 5k at 1.2350.that’s my idea.
Great article, Nial. Enjoyed it very much, and very timely….I will take your advice to heart. Cheers.
Enjoy very much your article.
I’ve been trolling the internet for a while looking for decent fx education which doesn’t cost thousands of dollars, or costly subscriptions for mediocre strategies. I recently joined your site and have found that your articles and lessons have switched on the light and shown me the power of price action. Pyramiding your trades is another great concept for me to learn.
Many thanks for providing a great place for newbies like myself to develope into experienced traders. GH.
woah! this is an interesting topic.
Thanx nial i find the lesson very educative on the current market conditions…
The above lesson is exactly how large sums of money are made by shrewd traders/investors and the times I have made the most money are due to pyramiding. Protecting profits is key and its such a good feeling when you are well up in a trade and you cant loose, with the trade still running in your favour. This is the beauty of trading. Money management can be exciting!
Hi Nial, thx for another excellent educative article like many before. I like your teaching style.
NICE! Will be looking to use this in some of the strong trends that are on at the moment.
I Bought your course last week but Since I started Following your website, Am feeling totally changed my account with winning trades, and this great lesson can increase more, Thanks for your Efforts.
Nial Fuller, you are a genius and truly a wonderful instructor. Very lucid and clear article. You make it simple and easy to understand. I have been a member for 2 years now and recommend you strongly to all the sensible traders i know. By the way when is your seminar coming up please.
As always great lesson Nial with your price action I have had a 70% success rate over the last three months.
I wish to echo a previous request to put this on video for us we are extremely lucky to have such a Mentor.
Thanks again Nial.
thanks for last to lessons as well using your style platform seeing diffrent set ups from new york close and ema 21.
Great article Nial. You always convey useful information in a clear & concise manner.
Really really helpful stuff, Nial. Thanks a lot!
good lesson thanks nial.
Yeah, this was helpful for me, Thanks Nial. Gives me confidence to NOT having to scale out of a trade for fear of loosing what I have gain. Now I know how to add on more trades and watch my risk managment. BIG Thanks.
This is the article just what I want.
Besides, your personal suggestion is very practical because Keeping trades simple is the best policy.
Great Info and you make it easy to understand.
This is great and well educating as it has always been.
You changed my trading styles and I now believe forex trading is real. Since I started reading your trading lessons, I have not blown up my account unlike in the past. Good work!
gr8 article Nial, but i want to know, does one have to wait for a PA setup to occur b4 scalling-in? i mean, after the first setup, does one need to wait for another b4…?
Great Lesson! Makes sense! It’s also important that you add to your winning trades and not to your losing trades in the hope that they’ll turn around and keep increasing your risk.
thanks again nial.
Thank you for your valuable teachings Nial. Nice value added method for maximizing profit.
Fantastic info,! Thanks a lot Nial!
Very insightful piece Nial, as always brillaintly written and extremely useful.
I enjoyed the article. I don’t particularly like scaling in. The information on scaling out was helpful to me. I have scaled out on usd/jpy and reduced my profit by $34,000. I will never ever scale out in my trading life. I thought by scaling out I was reducing my risk but now I have realized I was minimizing my profits. This scaling out lesson will save me on future profits. Thank you very much!
With this in mind now I believe the butterflies in my stomach wont haunt me in any way. I normally minimize my profits with early exits only to see it hit moments later. Your analysis is mostly perfect. Thank you so much guru.
Not an just good plan,
a great method and wonderful !
Hey mate another great article. Since taking on your advice on daily chart affirmation i’ve totally changed my whole stategy. I’ve netted a 1:3 and 1:2 in my last 2 trades. I tried a trailing stop on my last trade and totally messed it up or it would have been 1:6! Maybe this could be your next article on the Metatrader?
Really amazingly clear, Nial, Thank you for sharing here!
I just recently bought your course and everything is starting to make sense to me. Price action is key. This was a very good article on pyramiding profits. Thank you for all the information you provide.
As always, alot of great education. :)
Thanks Nial. How to scale in has always perplexed me. Your illustration has cleared some of my doubts.
Also your thoughts on NOT scaling out has set me thinking.
Because I normally take out half position when price has moved eqyuivalent to R1 in favour. Your comments have now set me to rethink about it.
Thank you again for your thoughts and candid explanations.
Have a good weekend.
Great lesson Nial! One request. If possible could you produce a video. Given a more vidual explaination to todays lesson? I believe many would benefit from it. As always thanks!
That is another piece of brilliance .
I liked it. Thanks, Neal!
Very helpful. Thanks Nial.
Another great one Nial, thanks.
Thanks for all your efforts Nials, great article.
Amazing insight again to successful trading methology. You have been my saviour. Before i found your trading website i was confined to the 95% of lossers bin, but now i have the confidence and belief to be able to make money in Forex and the bottom line is precisely that and not just being successful. Thank you for inspiring me.
Finally! Now I understand what pyramiding in to a trade means and how to do it! You make things so easy to understand. Thank you for an excellent lesson on a subject that has puzzled me for ages.
A nice and knowlegdeable article.
Truly a great method to maximize profit. I will definitely implement it into my trading. Thanks Nial.
Thank you so much for this expository insight in to the inner-working of fx trade management. Am so obliged to your efforts, keep em’up.
The previous two say it all. What can be added? Thanks for this.
Hi Nial – this is very clever. I caught the inside bar / pin bar combination on the 28th May (thanks to all your brilliant instruction :) and entered short 1.2480. I gained 100 pips and then opted out cos it got a bit scary (only started with Forex in February this year).
In the future, if I can see a pair trending strongly I’ll ignore my itchy feet and stay put until the winning trade has run it’s course. You’ve made this pretty basic – THANK YOU!
Nice lesson Nial, thanks you very much.
This is great. I need to invite you to Nairobi for some courses.
Fantastic, you’re fx trader very professional.
great article - what more does your full course contain?
Does it have tips and exercises for people with psychological baggages?
Amio, yes it does.
Wow! great lesson. You are very generous with us!
Excellent – Thank you.
Great article Neal,
As a relative newcomer this is most valuable and as you say timely in these markets.
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