Pyramiding is including to roles as price goes in the
desired pattern route. Pyramiding is a highly competitive trading technique
suitable only for full-time professional traders who know how to management
risks and have the self-discipline to perform a examined strategy continually.
Pyramiding should be implemented only according a pre-specified and examined
technique which includes an effective stop-loss.
Although pyramiding improves income if the pattern
carries on as expected, pyramiding also improves failures if the pattern
removes, so danger management is key. Reward/risk tradeoffs easily turn against
the chart investor when the price pattern removes. Because including to roles
changes the all inclusive costs of the entire place on a per-unit basis toward
the last price, a quick change to the original access price can outcome in a
significant reduction. And if the price changes route easily and significantly,
such as on a gap or fast market, it can be impossible or difficult to limit
danger according to strategy.
The signal to add to roles may be activated at
pre-specified prices that confirm the pattern route. Such prices might be based
on movements bands, moving earnings, a variety of trendlines, sensible chart
factors, transmission of resistance levels, and so on.
The conventional chart, which is also known as the
scaled-down chart or erect chart, starts with a large preliminary place and is
followed by pre-specified extras that decrease continually in dimension as
price goes in the indicated pattern route. For example, if the preliminary
access was for 100 stocks, then as price goes to the next pre-specified stage
add 50 more stocks, then 25 more at the next stage, then 13 more, for a
complete of 188 stocks.
The ugly chart, which is also known as the equivalent
amounts chart, contributes to an preliminary place in equivalent share-size
amounts. For example, if the preliminary access was for 100 stocks, then as
price goes to the next pre-specified stage add 100 more, then if the price
carries on 100 more, then 100 more, for a complete of 400. Here, however, the
average price per discuss is much higher, such that a smaller price change
reduces all revenue. The ugly chart provides higher prospective compensate at
the price of much probabilities, as compared to the conventional, scaled-down
chart.
The showing chart continually contributes to a place
up to a pre-specified price range, then it reduces the place continually as the
pattern carries on, so the showing chart is not a pure pattern following
technique. If the price does have a major move in the indicated pattern route,
the showing chart would outcome in less revenue than both the conventional and
ugly pyramids.
The maximum-leverage chart keeps on including highest
possible dimension up to the limits of gathered income and edge requirements.
This is the most competitive technique possible, and it provides the highest
possible prospective compensate, the highest possible danger, and the worst
reward
