Pyramiting is one of the investment methods. This trading method is risky and is a so-called “buy more and increase” strategy, and is used in both stocks and FX. However, if you are not familiar with this method, you can suffer significant losses, so you need to be careful.
What is pyramiding?
Pyramiding is a method of buying more stocks that are going up. Let’s start by entering one position. With this position becoming an unrealized profit, further positions are entered. Then, if there is further unrealized profit, the position will be further increased. If the stock you own increases in value, it’s a very simple method to buy more. It is important to judge and confirm the market price and how to add positions.
merit
If you use the current price as your stop-loss point when you buy more, you will not incur any losses. And because the number of entries is increasing, there is a high possibility that you will make a lot of money if you make a profit. Pyramiding can be a very profitable method if you follow the steps. If you look at the price of stock products and sell and buy at the right time, you can make several times more profit than usual.
Demerit
The disadvantage is that the market does not necessarily follow a one-sided trend. Even if you make an entry, it often goes backwards. If you enter a large number of positions and the market moves backwards, everything will go in the opposite direction, which means there is a possibility of big losses. If you are not familiar with economics, you may not be able to get extra balls and end up losing money. Some people hold on to high prices when there is no way they will go up.
forward pyramiding
Forward pyramiding is the standard method among these techniques. First, 400 shares, then 200 shares, 100 shares, and so on. Forward pyramiding involves buying more at the beginning of the position and gradually decreasing as you move up. Since the first position has an advantage, the advantage is that even if it goes against the upper position, it is likely to be profitable overall. This technique is called pyramiding because it resembles a pyramid triangle.
reverse pyramiding
Inverted pyramiding is very simple. If you imagine the above forward pyramiding and the opposite, it will be the correct answer as it is. First, 100 shares, then 200 shares, 400 shares, and so on. Inverted pyramiding is a less common technique. This is because there is no superiority because it is a method of gradually increasing the quantity. Few people have had great success with reverse pyramiding.
rectangular pyramiding
Rectangle is an investment method that lies between forward pyramiding and reverse pyramiding. This simply enters the same quantity at intervals. It is a higher risk method than forward pyramiding, but it is more profitable than forward pyramiding. The reason is that the quantity is high. It won’t work unless you have a solid market forecast. If you don’t practice it consistently over a long period of time, you won’t make more money and you won’t be able to establish your style.
pyramiding is hard
As mentioned above, pyramiding is theoretically a profitable strategy, but unfortunately it doesn’t work so well. The reason is that the chart does not move so conveniently. The chart is untouchable, so I don’t know how it works. I think it is difficult for beginners because there is a risk that the trend will change while pyramiding. It’s a good strategy to try after getting used to it to some extent.
Pyramiding risk management
Pyramiding risk management is very important. The reason why a strategy to increase the amount of money is that while it has the advantage of being able to make profits that are many times or even tens of times higher than normal trading if you can make a profit margin, there is also a risk of making a large loss. In order to succeed in pyramiding, it is first necessary to accurately grasp market trends. If the market is not in a trend, this strategy will fail and you may end up losing the entire amount.
Knowledge and skills required for pyramiding
The most important knowledge and skills required for pyramiding are the ability to read market prices. I have explained this method many times, but it does not work unless the market is trending. Today, it is important to have the ability to discern whether it is a trend or a range. Technical analysis and fundamental analysis are also important, and predicting today’s market prices is important.
Precautions for pyramiding
It is important to understand that pyramiding is a risky investment method. This strategy pursues profits too much, and if you take an extra position, you may incur a large loss. Be sure to clearly set your loss cut rules and determine the timing of your loss cut, as well as the profit-taking point in advance.
High leverage broker for pyramiding
If you want to do pyramiding, you have to build up your positions, and this can only be done with high leverage brokers such as HFM. Being able to trade with high leverage means that you can trade with small amounts. In other words, if this strategy works well, you can suddenly make a lot of money.
Peace of mind as there is no margin call
With HFM, there is no margin call, so you can rest assured. HFM uses a zero-cut system, so you will never be chased by debts, so you can rest assured. Zero-cut is also introduced in the following article, so please refer to it. Of course, experience is ultimately essential to win stably and advantageously. Analyze the market and buy and sell a lot in real time. You can rest assured that if you go negative, you will be guaranteed.
HFM stocks are abundant
HFM has a wide range of stocks. Investors can buy futures and other products according to their purpose. Opening an account is explained in the following article. Opening an account is free, so if you’re interested, why not open one? HFM allows you to invest not only in stocks, but also in FX, virtual currencies, and precious metals. If you buy in a rising market, you can make a profit as long as you continue. However, it is dangerous to place an order by averaging down against the trend. If the market goes down a little, there is a risk of losing your assets all at once.
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