Hiya all
Decided to start a journal here. since spending way too much time in here.
makes it convenient for me to keep track of ze trades.
ok to make a long story short.
this entry journal will be based on an experiment about the effects of "pyramiding" and how to limit the risk associated with it while maximising profits.
if risk management is possible, the gains should be limitless.
nb. this is an experiment, please use a demo, miro lots etc before going actually live.
few have succeed , and those wildly successful usually do not come back to tell you about it
pyramiding ( Intra-day) only works on pairs with high Average Trading Range. this method is not suited on ranging markets, I will choose the pound yen because it has the highest ATR. and is suited for Daily Intraday testing. make waiting less and usually take s 2-3 hours a day.
there are many types of pyramiding and I would like to employ them and verify the effects on my trading in real time and also to test if a EA works. I will be using a pyramid based on the techniques of what I believed a trader called Jesse Livermore used.
I may be wrong.
this being a extremely aggressive approach to profit maximisation but may also break your account in double quick time if one doesn't follow strict rules on stop losses etc
discipline is the key ..( something which I had trouble enforcing myself)
again please do not experiment with an overleveraged account, perhaps a demo account will be a good start, then micro mini lots etc etc
ideally with pyramiding your profits will be compounded. and your losses will ... well ... not be compounded ( cough)-
in essence your losses will be compounded as well.if you are not careful.
it is more difficult to recover your losses when your account is halved. leverage is a double edged sword.
the proper unit size formula is 1% of account/ ( ATR* Dollars per pip) - ( reference- turtle trading ) - if you need it you may PM me for it.
I have borrowed a few concepts from a trader called Jacko.It is a remarkable tool he coined the "anti-hedge". For the essense of his idea and good investing , please refer to the first 2 pages of his thread.
I will use the anti-hedge and TSL for every position , this ensures stops are honored,and profits allowed to run.
there will be 3 unit sizes / positions added per day for one major trend .
unit ratios will be in ratio of : 1, 2, 3 respectively
as long as there is continuation in the major trend.We will persist until a 100 pip move or TP is hit.if the 100 pip move is never completed. We will not take profit ( and will take a loss)
your loss should be 60pips in length or 1 unit size *60= 60pips respectively.
- this is inline with a good turtle rule to let your profits run and take profit ( a practice of patience) only when your target hits.you may add more units after the 100 pip move if you wish , or simply lock in profits and let it run its course with the TSLs.
stops should be manually moved to breakeven on the subsequent addtion of the 2nd and 3rd positions and if stopped out on retracement should be re-entered on exactly the same spot. this will be preformed by my EA. I haven't manually tried it but will see if it is humanly possible. I believe it will be somewhat cumbersome but do-able manually.
this method is counter logical to the common wisdom of always taking a profit.
inline with jesse's method of not taking profits til there is a clear trend reversal or until you are stopped out will make this experiment a puritant one.
a trend reversal is one I see on my 15min TF systems signal.
Summary:
Trades will be intra day ( unless it is a holiday, lack of volume, markets will range , there are ranging months that you do not want to employ this method as well). TP will be completing a short 100 pips move or 3 positions added at different points for a total of of 400pips in a 100 pip move.
Geppy has a ATR of 250 pips and above on a average day. Biggest moves mainly take place in London.
Trades will be taken live on this thread, and Asia will be mainly used for scalping since it mainly ranges.
accidents will happen from time to time if there is sudden unexpected news (spikes) resulting in change of trend, and stop losses are not executed in time.
I classify these as freak accidents.
a good broker may minimise this but your account should be prepared for such drawdowns.
for the three types of pyramids, you may refer to excerpts of an article by Robert W Colby
an example below
We wil be taking a position at on the Geppy. we will be using the "J " pyramid.
I will be trading 6 Standard lots per trade
position one will be taken at ( 1 standards) - this tests the trend , if you are wrong or temporarily so, let it stop out , no point adding .
position two will be taken at ( 2 Standards)- trend confirmed
Position three will be taken at ( 3 Standards)- captures the last 5-7/8 th of the move.
in a 100 pip move, this will give me ,
1*100+2*75+50*3= 100+150+150= 400 pips
my stop loss will be 1*60=60pips
thus I will be allowed 20/3 or 6.67 losses to 1 win in order to breakeven
risk reward 6:67:1
our win:loss ratio is expected to be 3:1
with a good system trigger
enuf said will experiment the first trade on the Geppy on Monday
Pyramiding for the uninitiated: A Risky Strategy
Pyramiding is adding to positions as price moves in the desired trend direction. Pyramiding is a highly aggressive trading strategy suitable only for full-time professional traders who know how to control risks and have the discipline to execute a tested plan consistently. Pyramiding should be executed only according a predetermined and tested method which includes an effective stop loss.
Although pyramiding increases profits if the trend continues as hoped, pyramiding also increases losses if the trend reverses, so risk control is key. Reward/risk tradeoffs quickly turn against the pyramid trader when the price trend reverses. Because adding to positions changes the total cost of the entire position on a per-unit basis toward the last price, a quick reversal to the original entry price can result in a significant loss. And if the price changes direction quickly and steeply, such as on a gap or fast market, it can be impossible or difficult to limit risk according to plan.
The signal to add to positions may be triggered at predetermined price points that confirm the trend direction. Such price points might be based on volatility bands, moving averages, a variety of trendlines, logical chart points, penetration of resistance levels, and so on.
The standard pyramid, which is also known as the scaled-down pyramid or upright pyramid, starts with a large initial position and is followed by predetermined additions that decrease systematically in size as price moves in the indicated trend direction. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 50 more shares, then 25 more at the next level, then 13 more, for a total of 188 shares.
The inverted pyramid, which is also known as the equal amounts pyramid, adds to an initial position in equal share-size increments. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 100 more, then if the price continues 100 more, then 100 more, for a total of 400. Here, however, the average cost per share is much higher, such that a smaller price reversal eliminates all profit. The inverted pyramid offers greater potential reward at the cost of much greater risk, as compared to the standard, scaled-down pyramid.
The reflecting pyramid systematically adds to a position up to a predetermined price level, then it reduces the position systematically as the trend continues, so the reflecting pyramid is not a pure trend following method. If the price does have a major move in the indicated trend direction, the reflecting pyramid would result in less profit than both the standard and inverted pyramids.
The maximum-leverage pyramid keeps on adding maximum size up to the limits of accumulated profits and margin requirements. This is the most aggressive strategy possible, and it offers the maximum potential reward, the maximum potential risk, and the worst reward/risk ratios. This pyramid must be combined with tight exit rules, or else it is a formula for near-certain ruin.
Decided to start a journal here. since spending way too much time in here.
makes it convenient for me to keep track of ze trades.
ok to make a long story short.
this entry journal will be based on an experiment about the effects of "pyramiding" and how to limit the risk associated with it while maximising profits.
if risk management is possible, the gains should be limitless.
nb. this is an experiment, please use a demo, miro lots etc before going actually live.
few have succeed , and those wildly successful usually do not come back to tell you about it
pyramiding ( Intra-day) only works on pairs with high Average Trading Range. this method is not suited on ranging markets, I will choose the pound yen because it has the highest ATR. and is suited for Daily Intraday testing. make waiting less and usually take s 2-3 hours a day.
there are many types of pyramiding and I would like to employ them and verify the effects on my trading in real time and also to test if a EA works. I will be using a pyramid based on the techniques of what I believed a trader called Jesse Livermore used.
I may be wrong.
this being a extremely aggressive approach to profit maximisation but may also break your account in double quick time if one doesn't follow strict rules on stop losses etc
discipline is the key ..( something which I had trouble enforcing myself)
again please do not experiment with an overleveraged account, perhaps a demo account will be a good start, then micro mini lots etc etc
ideally with pyramiding your profits will be compounded. and your losses will ... well ... not be compounded ( cough)-
in essence your losses will be compounded as well.if you are not careful.
it is more difficult to recover your losses when your account is halved. leverage is a double edged sword.
the proper unit size formula is 1% of account/ ( ATR* Dollars per pip) - ( reference- turtle trading ) - if you need it you may PM me for it.
I have borrowed a few concepts from a trader called Jacko.It is a remarkable tool he coined the "anti-hedge". For the essense of his idea and good investing , please refer to the first 2 pages of his thread.
I will use the anti-hedge and TSL for every position , this ensures stops are honored,and profits allowed to run.
there will be 3 unit sizes / positions added per day for one major trend .
unit ratios will be in ratio of : 1, 2, 3 respectively
as long as there is continuation in the major trend.We will persist until a 100 pip move or TP is hit.if the 100 pip move is never completed. We will not take profit ( and will take a loss)
your loss should be 60pips in length or 1 unit size *60= 60pips respectively.
- this is inline with a good turtle rule to let your profits run and take profit ( a practice of patience) only when your target hits.you may add more units after the 100 pip move if you wish , or simply lock in profits and let it run its course with the TSLs.
stops should be manually moved to breakeven on the subsequent addtion of the 2nd and 3rd positions and if stopped out on retracement should be re-entered on exactly the same spot. this will be preformed by my EA. I haven't manually tried it but will see if it is humanly possible. I believe it will be somewhat cumbersome but do-able manually.
this method is counter logical to the common wisdom of always taking a profit.
inline with jesse's method of not taking profits til there is a clear trend reversal or until you are stopped out will make this experiment a puritant one.
a trend reversal is one I see on my 15min TF systems signal.
Summary:
Trades will be intra day ( unless it is a holiday, lack of volume, markets will range , there are ranging months that you do not want to employ this method as well). TP will be completing a short 100 pips move or 3 positions added at different points for a total of of 400pips in a 100 pip move.
Geppy has a ATR of 250 pips and above on a average day. Biggest moves mainly take place in London.
Trades will be taken live on this thread, and Asia will be mainly used for scalping since it mainly ranges.
accidents will happen from time to time if there is sudden unexpected news (spikes) resulting in change of trend, and stop losses are not executed in time.
I classify these as freak accidents.
a good broker may minimise this but your account should be prepared for such drawdowns.
for the three types of pyramids, you may refer to excerpts of an article by Robert W Colby
an example below
We wil be taking a position at on the Geppy. we will be using the "J " pyramid.
I will be trading 6 Standard lots per trade
position one will be taken at ( 1 standards) - this tests the trend , if you are wrong or temporarily so, let it stop out , no point adding .
position two will be taken at ( 2 Standards)- trend confirmed
Position three will be taken at ( 3 Standards)- captures the last 5-7/8 th of the move.
in a 100 pip move, this will give me ,
1*100+2*75+50*3= 100+150+150= 400 pips
my stop loss will be 1*60=60pips
thus I will be allowed 20/3 or 6.67 losses to 1 win in order to breakeven
risk reward 6:67:1
our win:loss ratio is expected to be 3:1
with a good system triggerenuf said will experiment the first trade on the Geppy on Monday
Pyramiding for the uninitiated: A Risky Strategy
Pyramiding is adding to positions as price moves in the desired trend direction. Pyramiding is a highly aggressive trading strategy suitable only for full-time professional traders who know how to control risks and have the discipline to execute a tested plan consistently. Pyramiding should be executed only according a predetermined and tested method which includes an effective stop loss.
Although pyramiding increases profits if the trend continues as hoped, pyramiding also increases losses if the trend reverses, so risk control is key. Reward/risk tradeoffs quickly turn against the pyramid trader when the price trend reverses. Because adding to positions changes the total cost of the entire position on a per-unit basis toward the last price, a quick reversal to the original entry price can result in a significant loss. And if the price changes direction quickly and steeply, such as on a gap or fast market, it can be impossible or difficult to limit risk according to plan.
The signal to add to positions may be triggered at predetermined price points that confirm the trend direction. Such price points might be based on volatility bands, moving averages, a variety of trendlines, logical chart points, penetration of resistance levels, and so on.
The standard pyramid, which is also known as the scaled-down pyramid or upright pyramid, starts with a large initial position and is followed by predetermined additions that decrease systematically in size as price moves in the indicated trend direction. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 50 more shares, then 25 more at the next level, then 13 more, for a total of 188 shares.
The inverted pyramid, which is also known as the equal amounts pyramid, adds to an initial position in equal share-size increments. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 100 more, then if the price continues 100 more, then 100 more, for a total of 400. Here, however, the average cost per share is much higher, such that a smaller price reversal eliminates all profit. The inverted pyramid offers greater potential reward at the cost of much greater risk, as compared to the standard, scaled-down pyramid.
The reflecting pyramid systematically adds to a position up to a predetermined price level, then it reduces the position systematically as the trend continues, so the reflecting pyramid is not a pure trend following method. If the price does have a major move in the indicated trend direction, the reflecting pyramid would result in less profit than both the standard and inverted pyramids.
The maximum-leverage pyramid keeps on adding maximum size up to the limits of accumulated profits and margin requirements. This is the most aggressive strategy possible, and it offers the maximum potential reward, the maximum potential risk, and the worst reward/risk ratios. This pyramid must be combined with tight exit rules, or else it is a formula for near-certain ruin.
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