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How to increase profits using pyramiding method

Published 04.02.2017 at 06.50 PM.

If you prefer aggressive short-term trading with minimalinvestments and maximal gains, then this article will be quite useful for you. This time I will tell you how to multiply your profits with the help of the pyramiding method. Why is this article so useful?

  • first of all, you will be able to take the lead in various contests held by many brokers;
  • secondly, reading this article, you will learn how one deal can bring the profit which would normally take several months to make;
  • thirdly, you can trade with small deposits.

Before reading the article, I advise you to take a look at this post Money Management – Pyramiding.

Have you done it? Now let’s come down to essentials – the strategies that are based on this method of money management. Pay attention that we won’t place any stop orders, so even a smallest mistake will cost you the whole deposit. Therefore, you’d better divide your investment into several parts and trade on several accounts. Of course, you can do without this needless manipulation and just involvea partof your deposit in trading. However, in this case you can’t protect yourself from losses that can be incurred due to slippages during a period of high volatility.

Strategy No. 1

This strategy is the most aggressive one among the others. That’s because it entails using the whole amount of the free margin with the leverage of 1:200. It means that if you trade majors, prices will have capacity to go by only 50 pips against your deal. According to this strategy, you should step up the trading volume as soon as your free margin is increased. Consequently, you’d better choose trading instruments which move steadily. I recommend to use 30M or 1H time frames on the following currency pairs: GBP/USD, USD/JPY, USD/CAD, GBP/JPY, GBP/CAD.

The top priority is to open a trade properly as 50% of success depends on this first order. The best result will be obtained if traders shift their attention to bigger time frames when searching for setups on smaller ones. In other words, when you trade on the H1 chart, switch to the H4 or D1 time frame and place the key support/resistance levels there. If you see a reversal pattern near one of these levels on your active time frame, enter the market without hesitation and increase the trading volume as your free margin grows bigger.

Here are the patterns which are good to be used under this strategy:

  • 123;
  • Ledge;
  • Three Indians;
  • Double Bottom/Double Top;
  • Triple Bottom/Triple Top;
  • Head and Shoulders.

Besides, you can earn on breaks through support/resistance levels when some important news are delivered.

For example, let’s see how USD/JPY managed to gain ground after it had breached the selling area between 101.65 and 101.83. I reckon this series of deals could bring a profit of 400-500%, and at peaks the income could increase by 800-1,000%. 

 

It’s up to you to decide which strategy to choose; the key idea is to enter the market, involving the full amount of free margin, and open more deals as the price moves in your direction. It is equally important to exit the market at the right time. You should fix profits as soon as you see a counter-trend signal, deviation of the price from the entry point by several pips, or when you reach acertain profit level.

Strategy No. 2

This strategy is less aggressive. It differs slightly from the first strategy:

  • the leverage is 1:100;
  • the radius of price moves for majors is 100 pips;
  • the working time frames are H1-H4;

Another difference from the previous strategy is that the approach to increasing the trading volume is changed: you need to place breakout pending orders at price extremes.

Let’s have a look at the chart of GBP/USD. The initial bearish wave was a signal to open the first deal. Next deals were placed when the price broke through local lows that could easily be defined with the help of the standard ZigZag indicator. After the second pending order had been triggered, we were able to decide on where to place the major stop loss. It was put a few pips above the local high, as seen on the chart.

 

The gains can be fixed after the certain profit level is reached (1,000% for example) or the trade is closed by the major stop loss.

Strategy No. 3

The basics of this strategy are almost the same as the ones of the second strategy. The only difference is that the trading volume is increased with the help of limit orders placed at Fibo 38.2% applied to the last wave, whereas the previous strategy implied using breakout pending orders. To avoid dwelling upon principles of the wave analysis, you can take the zigzag’s ray to be the completed wave. In this case you open a deal at the best price.

I advise you to transfer profits to a savings account after each successful trade.

Hopefully, you will make good use of my know-how on profit increasing with the help of the pyramiding method.

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