Charles George M Moore#63

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What is pyramiding in forex trading and how can it enhance profits?

Pyramiding is a position-sizing strategy where traders add to winning positions as trends develop, effectively “stacking” exposure while markets move in their favor. For example, a trader long EUR/USD at 1.0700 may add another unit at 1.0750 after confirmation, and a third at 1.0800, compounding gains. The benefit: maximizing strong trends while risking only unrealized profits. However, pyramiding must be controlled—without strict stop-loss rules, a reversal can wipe out multiple layers. Best practices include using trailing stops to lock profits, reducing lot size on each additional entry, and avoiding pyramiding near known volatility events. Institutions apply pyramiding through scaling models and volatility filters, while retail traders often misuse it by adding without discipline. Proper pyramiding transforms good trades into exceptional ones but requires psychological control and technical precision.