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Tom:
Pyramiding scares the heck out of me. You can quickly find your exposure is
way too high for your account size.
My opinion is you decide your trade size in advance based on your account
equity and trade risk. I suppose if you have a long time frame, trade size
should be adjusted periodically to reflect up-to-date account equity.
An alternative (but opposite to pyramiding) that many short time frame
traders use is to open the trade with multiple contracts and two or three
stop levels. The first portion of the position is closed to cover costs,
the second when a predefined target is reached and the third is held to let
profits run. If the trade goes against you, you get small very quickly with
the tight stop(s). If you are interested in this latter method, Tom, I can
dig up some websites on it.
Good luck.
----- Original Message -----
From: Tom Strickland <tstrickland@xxxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: December 13, 1999 08:53
Subject: Pyramiding
Does anyone have knowledge of, experience with and/or references to
pyramiding? By pyramiding I mean the systematic increase in your position
size as the price of your investment moves up (or down if you are short).
I've seen many casual comments about pyramiding but no systematic, thorough
studies.
Tom Strickland
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