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Hi Tom,
Although most of us have been enticed by the concept of Pyramiding, only a
few of the most astute professional traders are able to add to their
positions and get away with it (until they crash--then we no longer refer to
them as astute professional traders). The other 99% of us have to do pretty
much the opposite to survive.
Several people who have developed the concept of "position sizing" propose a
systematic way of maximizing your net gain while preserving your capital.
Whether you learn and apply these concepts systematically, or whether you
yourself develop a plan as a result of a statistical understanding of your
trading plan, this is the only way of having some level of confidence that
your trading endeavors will be successful.
Dr. Van Tharp does a pretty good job of presenting this material--you can
find his books on Amazon.
Good Luck,
Dan
-----Original Message-----
From: Glen Wallace <gcwallace@xxxxxxxx>
To: MetaStock listserver <metastock@xxxxxxxxxxxxx>
Date: Monday, December 13, 1999 4:40 PM
Subject: Re: Pyramiding
>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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