Pyramiding positions

[caleb2003]

Hello, anyone got any opinions on the fact whenever I try to pyramid my positions, the stock comes to a complete halt, as I got in on SDL at about 22 and now we get the big move so I goes in to add to my position and voila the thing stops dead and appears to be a big pump and dump.

This has happened a couple of times to me, is this just a lack of patience or being too slow or am I just not seeing the bigger picture with Volume etc?

 

[nizar]

Hello, anyone got any opinions on the fact whenever I try to pyramid my positions, the stock comes to a complete halt, as I got in on SDL at about 22 and now we get the big move so I goes in to add to my position and voila the thing stops dead and appears to be a big pump and dump.

This has happened a couple of times to me, is this just a lack of patience or being too slow or am I just not seeing the bigger picture with Volume etc?

Hi Caleb.
I pyramid my positions after the bounce.

Eg. ESG was a recent one.
See how it had that pullback from 47.5 the high of the move until 42ish. I didnt top up then, because i didnt know IF the uptrend would even continue and i didnt know if it would actually go lower again before bouncing.

In the end i topped up after the nice white candle with a higher high than the previous highs where it closed at 44c (it had a tight trading range btw 41-43c). So i bought at the open the next day.

Another example MPO, on its run from 11c to 17.5c the top, it pulled back to 14.5, so i suspected this to be the support for the next pullback. And it was, but i didnt jump the gun, i waited for the bounce and ended up buying at 15.5c on the next day.

So yeh -- i reckon always wait for bounce before pyramiding in discretionary trading -- well thats what i do and its worked for me so far.

 

[CanOz]

Hi Caleb.
I pyramid my positions after the bounce.

Eg. ESG was a recent one.
See how it had that pullback from 47.5 the high of the move until 42ish. I didnt top up then, because i didnt know IF the uptrend would even continue and i didnt know if it would actually go lower again before bouncing.

In the end i topped up after the nice white candle with a higher high than the previous highs where it closed at 44c (it had a tight trading range btw 41-43c). So i bought at the open the next day.

Another example MPO, on its run from 11c to 17.5c the top, it pulled back to 14.5, so i suspected this to be the support for the next pullback. And it was, but i didnt jump the gun, i waited for the bounce and ended up buying at 15.5c on the next day.

So yeh -- i reckon always wait for bounce before pyramiding in discretionary trading -- well thats what i do and its worked for me so far.

As you pyramid Nizar, i assume you also move your trailing stop? Can you explain this too please.

 

[nizar]

As you pyramid Nizar, i assume you also move your trailing stop? Can you explain this too please.

True.

I move my stop to below the latest support.

For example.
ESG, when it bounced off 50c (indicating a new support level), this was my cue to pyramid again at open the next day (yesterdays open) but I didnt due to exhaustion of funds.

ESG my initial buy was when it broke 35c on volume into blue skies (it had failed at this resistance 3times previously).
Initial stop was a touch below 30c (see the support there).

Then it retraced back to the breakout point (very textbook). Sometimes i buy half parcel on the break and the other half on the pullback. In this instance i bought a full parcel on the break. So entry was 38c.

It ran to 47.5c the peak of the run, then retraced to 41c the low. Then it stayed there for a bit. When it had that first white candle that closed above the previous highs (from when it was trading in a narrow range) that was my cue to top up. So i did at 45.5 and the stop was moved to 40c (just below the new support).

Now the stop is moved to 49c (below where the tail was the other day).

Note that all my stops are end of day stops.

With MPO initial entry 10.5. Intial stop 9.5c. Then as it advanced, top up at 15.5c, stop moved to 13.5c (notice how it had the tail to 14c).

The stop is still there. After todays action if it closes at 28ish, that would be the cue for me to move the stop upwards to just below the low of the retrace, so probably 23ish.

Note how MPO had bounced off the 20dma nicely, and same with ESG.

Mechanical trading is much better though, im just doing this in the meantime, while im just trying to pull the money and time together for tradesim and data but i will get onto it shortly (last exam next week! )

Hope that helps.

 

[caleb2003]

Thanks Nizar, very useful, so in my case its more impatience, I suppose I seen the stock fly and wanted to get in more whilst its moving.

 

[stoxclimber]

Hello, anyone got any opinions on the fact whenever I try to pyramid my positions, the stock comes to a complete halt, as I got in on SDL at about 22 and now we get the big move so I goes in to add to my position and voila the thing stops dead and appears to be a big pump and dump.

Yeah, what actually happened (according to my friend's uncles brother in law who works at the ASX) was that people heard that Mr. "Caleb2003" was buying in so they decided to sell. That's why it happens every time!

 

[caleb2003]

Yeah, what actually happened (according to my friend's uncles brother in law who works at the ASX) was that people heard that Mr. "Caleb2003" was buying in so they decided to sell. That's why it happens every time!

Damn, I knew it!

 

[theasxgorilla]

Hello, anyone got any opinions on the fact whenever I try to pyramid my positions, the stock comes to a complete halt, as I got in on SDL at about 22 and now we get the big move so I goes in to add to my position and voila the thing stops dead and appears to be a big pump and dump.

This has happened a couple of times to me, is this just a lack of patience or being too slow or am I just not seeing the bigger picture with Volume etc?

It could be either patience or being too slow. The answer depends on the when and why of your decision to place the initial trade and to subsequently pyramid. The idea is to add smaller and smaller amounts to a position as the trend progresses...but to have your entire position in place as soon as you have confirmed the trends continuation to your satisfaction. The risk/reward scenario is always best toward the beginning of a move.

Two good methods for confirming a continuation of the trend is a higher major-low or a new major-high. A higher major low is more significant than a new major high, although a new all-time-high is probably more significant than just any new major high as there is nothing quite like blue sky for the continuation of an uptrend.

In the case of SDL you had both confirmed on the 12th of June. Attached is a graphic of how one might have traded this share with pyramiding.

 

[tech/a]

ASX is spot on.

The earlier you pyramid the more benificial the extra position size over a move particularly a sustained one.
Best way to get on early is to be trading in a lesser timeframe--like an hrly chart.

There is another consideration. If pyramids are taken over longer periods perhaps like ASX suggests you can traet each pyramid trade as a trade of its own,with its own entry/stop and exit rules. It may get closed but the base trade may continue.

 

[Kauri]

Although I label some multiple trades in the same stock as pyramid trades in reality for me they are completely individual, if I see a trade opportunity it is assessed completely on its own merits re R/R, size of trade etc... the fact that I may already hold a position does not enter the equation... it just becomes convenient for trade management purposes at some stage to lump them together with a common stop and treat them as a single trade.
Cheers
Kauri

 

[nizar]

Although I label some multiple trades in the same stock as pyramid trades in reality for me they are completely individual, if I see a trade opportunity it is assessed completely on its own merits re R/R, size of trade etc... the fact that I may already hold a position does not enter the equation... it just becomes convenient for trade management purposes at some stage to lump them together with a common stop and treat them as a single trade.
Cheers
Kauri

Hi Kauri.
Yeh i treat mine as a single trade -- for now.
But i really need to investigate/backtest which one works better over the long term.

 

[Kauri]

Hi Kauri.
Yeh i treat mine as a single trade -- for now.
But i really need to investigate/backtest which one works better over the long term.

Nizar,
I may not be talking about the same thing as you (happens to me a lot ), but I have found that if for instance you have an expected 2R min requirement before entering a trade, but take a pyramid trade to add to your position that has a lower expected RR you may come out with more$ but at the same time will also lower your overall return compared to the risk taken.... if the above doesn't make sense don't worry, I'm having a bad week
Cheers
Kauri

 

[nizar]

Nizar,
I may not be talking about the same thing as you (happens to me a lot ), but I have found that if for instance you have an expected 2R min requirement before entering a trade, but take a pyramid trade to add to your position that has a lower expected RR you may come out with more$ but at the same time will also lower your overall return compared to the risk taken.... if the above doesn't make sense don't worry, I'm having a bad week
Cheers
Kauri

LOL nah i understand you perfectly well.
I think its just because we have different styles of trading.

I dont have price targets in which i exit, rather, i try to ride the trend as long and as hard as possible.

So i have no idea what my R/R is before i enter a trade, or whether or not the trade will even be profitable.

Exits for me is through trailing stops.