Sizing the position correctly as you pyramid along the direction of your trade determines the impact on your portfolio
You do not want to be in a 100% gain stock with just a 5% position. (Here's a more detailed explanation of Why is it so)
Ideal situation is where you have 30% allocation and the trade moves 30-40% in your direction
But you won't always start with a 30% size in a trade and hope for the best!
Pyramiding is when you add to a position as the price moves in your favor. This strategy allows traders to maximize their profits by increasing their exposure to a winning trade. However, it is important to note that pyramiding also increases risk and hence placing apt stops helps
Why is it difficult?
It goes against human nature of avoiding to buy more when prices rise
It needs you to be very patient (This one took 50 days to move....after making the rise)
Let's look at an example of 35% allocation with the trade moving 20% in the direction and still running..:)
First Three positions update :
Fourth position update:
Blue - Buy
Red - Sold Some
Selection Criteria :
This continuation setup came into the scan and had all the necessary ingredients
62% move in 26 days
Undercut 20DMA
Big base on base
Resting on 20 DMA
Purple dots - Many dots along the way indicate huge buying interest
No major sell offs
Entry criteria : Gave a strong start on the day and volumes were present right from the start
Selling Rule : After an extended move , I decided to sell some portion
The structure was intact and the Market breadth was also not extended at this point and hence I had planned to sit tight and add when it sets up again
In coming days , it gave multiple entries and because of the profit cushion I was able to size the position without taking huge risks
Exit Criteria :
Currently this is 35% of the portfolio
The trailing SL is moved to 20DMA
Will start selling into strength with rise and book gains
Do follow the trade on twitter and Stay tuned!
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