The Pyramid Strategy is a way for you to make quick money in the Forex market. In just a moment you can make a profit of 2 or 3 times your capital and almost like a pyramid. So, Is forex a pyramid scheme?
Forex isn’t a Pyramid scheme because you do not invite people to sign up and do not get paid commission or sell any product. You only trade currency pairs.
However, this article is for reference purposes only. We do not encourage you to get rich quickly. Because Pyramids can make you profitable, they can also make you split 2 and 3 accounts if you go wrong. Come on, let’s find out what is the Pyramid trading strategy with me.
What is the Pyramid Strategy?
The Pyramid Strategy, also known as the Pyramid, is a strategy that involves expanding your winning position. In other words, it is a buying or selling strategy to add to an existing position after the market moves in the direction you anticipated.
In this strategy, if done correctly, you will not take any risks. You are minimizing your risk when the price moves in your direction.
That is, when we win, we need to win big, and when we lose, we need to lose less. You need to control your trading psychology if you want to become a successful Forex trader. In short, in a folkway, this is the “fry it with fat” strategy. Either very profit or loss on profit. Simple as that!
How to trade with the Pyramid strategy
The example above shows that the market is showing a clear uptrend, with the following peaks being higher than the former. The market is now repeatedly breaking resistance and then retesting that resistance as new support. Market conditions like these are ideal for scaling your profitable trading position with Pyramid.
The initial Buy order is triggered when the market tests old resistance, which is now new support. The second and third Buy orders are similar to the first, both triggered when the market retests old resistance and new support now.
Remember that the market has to break through each old top and then there is still a sign that there is still bullish momentum to be able to add orders in the direction of the original trend. This is why it is important to catch a trend with strong momentum as a prerequisite for the pyramid strategy to work.
Advantages and disadvantages of using the Pyramid strategy
The first advantage that everyone can see right away is that the profit is many times higher than in the traditional form of trading. In addition, you can completely manage risks when combining the Pyramid trading strategy with the use of Trailing Stop.
However, in this article, we will not list the advantages of the pyramid trading strategy. Instead, we’ll list all the cons. Because in my personal opinion this is not a perfect method. Because the price goes in the right direction, it’s okay, but the price just needs to flip the rafter, reverse the situation and you will lose a lot, if you are not careful, your account will be burned:
It is very difficult for you to manage a large number of open order types; Traders need to be patient, have a special cool head to analyze, determine the right direction. This pyramid is only suitable for traders with many years of experience in the forex market. For those who are just starting, we advise you not to use the Pyramid method. Since the market is not always on its side, go in the direction you think it is. Then they will shake, jump, jerk or even bite your stop loss before going in the right direction. Also, if you don’t know how to determine when is the last moment that the team closes. orders, you can lose a significant part of the profit. As well as a need to know moderation, carefully calculate the number of trading orders. Even if everything goes in the right direction, you can never know for sure when the trend will reverse. That is, here you need to determine the right time and the right place, the right trading volume, to get the most profit, as well as not increase your risk.
What is the Pyramid Strategy? it is a trading technique that you should know as it can be extremely advantageous for your trading. If you do it right, you can significantly increase your profits without adding additional risk. However, it is important to note that it is not always easy to implement and should not be used without proper consideration because not all markets are suitable for pyramiding.