David D Walker#97

View translation

What is pyramiding in forex and how does it differ from averaging down?

Pyramiding means adding to profitable positions as they move in the trader’s favor, compounding gains. Averaging down means adding to losers, hoping for recovery—usually a recipe for ruin. Institutions pyramid cautiously in trending markets with defined stops. Retail traders can pyramid by risking profits, not original capital, when adding. Benefits: magnifying returns in strong trends. Risks: pyramiding too aggressively may expose traders to sharp reversals. The key difference: pyramiding aligns with momentum, while averaging down fights it. Smart pyramiding builds exponential profits, while averaging down often accelerates losses.