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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.

As a trader, it's a general rule of thumb that we should always be looking to maximise potential returns (per unit of risk) with each transaction. We should always be looking to squeeze as much out of the market as we can.

There are times when this can occur by simply letting the trade run its course. However, sometimes market conditions align perfectly for savvy traders to "press the trade" or  Pyramiding into the trade.

Don't press your luck; press the trade instead!

Attempting multiple entries in the direction of a trend is one strategy savvy traders use in an attempt to maximise return (otherwise known as Pyramiding). The problem with this tactic is that while it may increase the potential reward, having a larger position in the market also opens you up to more risk. As a trader, you need to find the perfect balance of pressing the trade while not pressing your luck.

There are a few ways to achieve this:

 

Pick your battles carefully when Pyramiding

You may find that as time wears on, you're left with a large portion (>2% of total equity) in a single trade. The tactic of adding exposure will generally make for a "short" pyramid, which typically won't grow over 2.5% of overall equity. This Pyramiding tactic ensures you're exposed to additional upside while minimising downside to a level with which you're comfortable.

Here are a few things to be wary of:

Final Thoughts on Pyramiding

Remember always to start small and slowly. There's no need to rush in. Experiment with pyramiding until you're comfortable with your approach. Always remember the two key elements to consider:

  1. Resist the temptation to take profit early when the opportunity arises. Sometimes it's best to sit on an existing trade.
  2. Be wary of adding to your trade at "worse" levels. Trends will always end at a certain point, so you don't want to be pyramiding into an extended, ongoing trend. Look for new trends to pyramid in, which will reduce your overall risk.