Pyramiding is a trading strategy that involves adding to a profitable position as the price moves in your favor, while simultaneously taking actions to protect profits, such as using stop orders and gradually moving them closer to the quote as the trend develops.
This is a low-risk, high-profit approach that involves taking advantage of medium-term and long-term price movements to increase position size and potentially enhance profits. A prerequisite is the presence of a clearly defined trend.
In simple terms, the first entry occurs upon confirmation of the trend, but after stop-losses are taken out, before an impulse movement, with subsequent entries on pullback movements closer to the trendline. After confirming further trend development, previously placed stop orders are moved closer to the current price, under the ascending trend line. All positions are closed as soon as the end of the trend is confirmed.
With proper risk management and basic technical knowledge, this strategy will have minimal risks and maximum profit potential over time.
This strategy is not recommended for beginner traders without an understanding of the theoretical basis. Before applying it, a clear understanding of the theory behind this strategy is necessary, and it is advisable to practice on historical charts or a demo account.
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