Position management series: positive pyramid increase and inverted pyramid increase

The pyramid increase strategy was proposed by the famous speculator Jesse Livermore. All traders who are familiar with the speculative market are familiar with this point. Today I will talk about the problem of positive pyramid increase from my perspective.

Three principles for increasing positions in the positive pyramid

First: The position is in a profitable state to increase the position . Because human nature is to go against the trend, so in order to prevent this, we must adhere to the strict rules of increasing positions only when they are profitable. Of course, it is special to encounter a callback to increase the position and a rebound to cover the position, because these are all in a strict plan.

Second: Decreasing increase in position increase method. What is Decreasing Masukura? That is, when the position is increased, the position is getting smaller and smaller.

Third: Increase positions according to the length of the band . Under normal circumstances, it should not be more than three times. In the extreme range market, the position should be closed at one time. In the extreme trend market, the main position comes from adding positions later.

The benefits of opening and adding positions in the positive pyramid

Its advantage lies in effectively avoiding losses. If you find a loss after the first position increase, the best solution is to cut the position above half of the first open position and the first increase position, and at the latest can not be lower than two points One position, after closing all positions in this way, it is still profitable, although the profit is small.

If you find that the market reverses after you add your position for the third time, you'd better cut your position at half of the time between your second and third increases, so that you won't lose money and keep the original position and Be the first to add positions, then observe their direction and make timely and accurate decisions.

The opposite of positive pyramiding is inverted pyramiding. Here I briefly talk about it. The inverted pyramid reflects that traders are not very optimistic about the market, so the first time the position is small, when the market develops unexpectedly, the trader will forget the stop loss and risk control principles. Finally, I leave you with a question, why does the inverted pyramid reflect human irrationality?

If the market reverses, losses will occur frequently, and the original profitable order will be turned into a loss order. In view of this situation, I personally think that the initial position and the increase position should be regarded as independent individuals, and the entry stop loss and risk control principles are the same. You must think clearly, otherwise you will suffer heavy losses.

The last little benefit is the method of peer-to-peer position increase. The initial position and the increase position are the same. When the increase position is pulled back to one-half, the position will be liquidated, otherwise you will lose money. Finally, I wish everyone a good night, lock the God of Wealth when you are free, and more wealth is waiting for you.