The benefits of pyramid scaling are capital management, position control, risk management, leaving room for maneuver, and using a reasonable amount of capital to maintain a base position. When judgments are correct, you can continuously add to your position in the direction of the trend and take profits in batches. When judgments are wrong, you can exit decisively and promptly.
Full investment with no reservations is a preset without any retention. All your funds will lose normal judgment with fluctuations, and greed and fear will occupy your mind, leading to panic selling at the lowest point.
Due to different allocation of positions, the final profits will also vary. Only with reasonable allocation of base positions and active positions can one strive for maximum profits.
It can be simply divided into pyramid scaling, inverted pyramid scaling, and proportional scaling.
Pyramid scaling involves initially investing a larger amount and gradually reducing the investment in later stages, thereby reducing investment risk. Although it does not yield as much profit as one-time full investment, the risk is lower.
Inverted pyramid scaling involves initially investing a smaller amount and gradually increasing the investment in later stages. The more the price rises, the larger the added position, which is suitable for chasing higher returns in a clear trend.
The applicable market environment, trend strength, and investment risk preferences also vary.
Pyramid scaling has better risk control, less psychological pressure, and limited losses during pullbacks; however, entering positions too early may lead to long-term unrealized losses.
Inverted pyramid scaling yields higher returns when the bull market trend is established, but losses can also be larger when the trend reverses. It can pursue maximum returns during the main upward wave of a bull market. It helps avoid early heavy positions and reduces initial trial-and-error costs, but it requires accurate identification of strong one-sided trends.
Conservative investors are more suitable for pyramid scaling, pursuing stable returns.
Aggressive investors are more suitable for pyramid scaling when the trend is clear, but they need to be wary of high-level fluctuations.