Here is a strategy for adding lots during a trend that someone sent me called The Pyramid:
"Start with more than 1 (mini)lot and add lesser amounts of lots as price continues. This makes the newer positions smaller and drawdown on them eats less profit and the "base" positions generate a lot of profit."
I like this strategy because I have noticed that a trend is usually strongest at the beginning.
I have expanded on this strategy in the following Excel spreadsheet by starting with a 50p stop for 1 lot and increasing the stop 25p each time the lot size decreases. This helps compensate at the end of a trend where I noticed that usually most drawdowns occur.
In the 1st example, the 1st trade was a winner and the remaing 5 were losers, but still made 283p.
In the 2nd example, the 1st 3 trades were losers and the remaining 3 were winners, but still made 55p.
You can change W or L to see automically see different results.
Other:
- No take profit is used.
- The info. in the spreadsheet assumes that there were 6 trades within that trend, and that the trend ended at a price of 1.7500. If there are more than 6, you could continue with .1 lots and increase the S/L until there is a new trend. You can use any increment you prefer.
- The info. in the spreadsheet also assumes that a new trade was entered every 50p during the trend.
- The spreadsheet does not take into account pip value. The purpose is to illustrate the benefit of this system.
- You can use any increasing stop amount you want, I just arbitrarily chose 25p increments.
- This system should produce similar results when using your own method to determine when to enter a new trade.
"Start with more than 1 (mini)lot and add lesser amounts of lots as price continues. This makes the newer positions smaller and drawdown on them eats less profit and the "base" positions generate a lot of profit."
I like this strategy because I have noticed that a trend is usually strongest at the beginning.
I have expanded on this strategy in the following Excel spreadsheet by starting with a 50p stop for 1 lot and increasing the stop 25p each time the lot size decreases. This helps compensate at the end of a trend where I noticed that usually most drawdowns occur.
In the 1st example, the 1st trade was a winner and the remaing 5 were losers, but still made 283p.
In the 2nd example, the 1st 3 trades were losers and the remaining 3 were winners, but still made 55p.
You can change W or L to see automically see different results.
Other:
- No take profit is used.
- The info. in the spreadsheet assumes that there were 6 trades within that trend, and that the trend ended at a price of 1.7500. If there are more than 6, you could continue with .1 lots and increase the S/L until there is a new trend. You can use any increment you prefer.
- The info. in the spreadsheet also assumes that a new trade was entered every 50p during the trend.
- The spreadsheet does not take into account pip value. The purpose is to illustrate the benefit of this system.
- You can use any increasing stop amount you want, I just arbitrarily chose 25p increments.
- This system should produce similar results when using your own method to determine when to enter a new trade.
Attached File(s)
Pyramid_Revised.xls
16 KB
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699 downloads