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Pyramiding a Daily Trendadd to it, but only with the market's money

Evidence: ModerateProfessionalSwing · Position building

Every page in this book so far takes one position and manages it. This one takes a small position and adds to it as the trend pays, so the largest exposure sits on the trade that has already proven itself.

The rule that makes it survivable is unglamorous and absolute: the stop for the whole position moves up with every addition, so the combined risk never exceeds the original risk. Adding without moving the stop is not pyramiding, it is doubling down, and it is how accounts die.

One correction to the version usually taught: with adds one ATR apart and a stop two ATR behind the last one, the position does not become risk-free on the second add. It becomes risk-free on the third. Work it through before you rely on it.

Everything on this page is measured in daily bars. A rule that says 'twenty bars' means twenty trading days — about a month — and a stop that survives that has to be wide enough to sit through a normal week.

Category
Swing · Position building
Timeframe
D1 · the underlying trend signal can be any of the trend pages in this library
Suitable pairs
Instruments that trend cleanly — XAUUSD, USDJPY, index CFDs
Session
Daily close
Indicators / tools
ATR(20) for the add spacing and the trailing stop · EMA(20) for the trend

Valid setup

SW-06 · PYRAMIDING A DAILY TREND — VALID SETUP USDJPY · D1 · three units, each smaller than the last, and one stop that follows them up LONG 145.94 147.33 148.72 150.10 151.49 152.88 154.27 open profit — no target, the stop decides EMA(20) — no adding below it UNIT 3 — smallest size UNIT 2 — one ATR above unit 1 UNIT 1 — half the normal risk STOP for the WHOLE position = 2 × ATR(20) below the last add 1 2 3 148.07 ① Unit 1 on the trend signal — half normal risk ② Unit 2 after 1 × ATR of profit — smaller ③ Unit 3 after another 1 × ATR — smaller again ④ One stop for everything, moved up at each add ⑤ The stop clears unit 1 on the third add, not the second ⑥ No target, no partials — the stop takes you out

Exact rules

Entry

  • First unit: whatever trend entry you already use. Size it at half your normal risk — you are going to add three more times.
  • Add one unit for every 1 × ATR(20) the trade moves in your favour, to a maximum of four units total.
  • Each unit is smaller than the one before it: 4, 3, 2, 1 as a share. The later units have worse entry prices and should carry less of the position.
  • No adding after a daily close below the EMA(20), whatever the profit is.

Stop loss

  • One stop for the whole position, never one per unit.
  • Move it to 2 × ATR(20) below the most recent add, every time you add. The adds are spaced 1 × ATR apart and the stop trails 2 × ATR behind the last one, so the stop passes the first unit's entry on the third add — that is the bar at which the whole position becomes risk-free, and it is one add later than most descriptions of this claim.
  • Total risk at the first unit: 0.5%. It never goes above that, at any size.

Take profit / exit

  • No target. Exit the whole position on a daily close below the trailing stop.
  • Do not take partial profits off a pyramided position. Scaling out of something you scaled into leaves you paying two spreads for a flat result.
  • Expect most attempts to end after one or two units. The structure exists for the one trade in ten that runs, and it is worthless without that trade.

Build Pyramiding a Daily Trend

Reading this page is free and always will be. Taking it is what costs — the complete MQL5 for the rules above, yours to keep, permanently. Five of them cost $10 and they never expire.

More from Swing

Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.