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Secret 21

Pyramid the correct way

The big money is made only by pyramiding a good position in a trending market. You have an excellent opportunity to use leverage with your unrealized profits to create a larger position than otherwise possible. Pyramiding takes both courage and self-control. The “weak hands” seldom make the big money, primarily because they do not have the guts to pyramid and maximize the opportunities they are right about (or they do not have the smarts to do it right). Please be advised, there is a right way and a wrong way to pyramid.

The masters suggest you never reverse pyramid (that is, add a greater number of contracts than your initial position while the market moves your way). Your first risk should be your greatest risk. It is generally better to decrease the size of your position throughout the ride, not increase it. In this way, you have the opportunity to increase your profitability without dramatically increasing your risk.


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