Pyramid and Peel

[Oscar Reed]

Just reading this on the Forexmospherian thread.

Would be good to see if any one else trades like this.

http://www.trade2win.com/boards/dis...ert-retail-forex-trader-5400.html#post2595034

So - once you are feeling a bit more comfortable with the methodology - why not then look at the PPND strategy - ie pyramid and peel but never dump .

To do this instead of say just entering with 1 lot or $10 a pip - enter for example 3 times within a minute with a $3 then a $4 and then a $3 - still $10 a pip - but you can then scale out or peel as price pulls back rather than exit completely. So you might have taken $7 off at 10 pips and stayed with just $3 and then added another $4 as it moved up to 11 pips and then taken more off at 18 pips etc etc and then by 5 21pm decided to come out all together - with well over 50 pips at different stake sizes etc

 

[counter_violent]

Just reading this on the Forexmospherian thread.

Would be good to see if any one else trades like this.

http://www.trade2win.com/boards/dis...ert-retail-forex-trader-5400.html#post2595034

So - once you are feeling a bit more comfortable with the methodology - why not then look at the PPND strategy - ie pyramid and peel but never dump .

To do this instead of say just entering with 1 lot or $10 a pip - enter for example 3 times within a minute with a $3 then a $4 and then a $3 - still $10 a pip - but you can then scale out or peel as price pulls back rather than exit completely. So you might have taken $7 off at 10 pips and stayed with just $3 and then added another $4 as it moved up to 11 pips and then taken more off at 18 pips etc etc and then by 5 21pm decided to come out all together - with well over 50 pips at different stake sizes etc

I think you have hit the nail on the head as to why no one talks to him.

The terminology used is complete S.P.H.E.R.I.C.A.L.S.

 

[trendie]

Just reading this on the Forexmospherian thread.

Would be good to see if any one else trades like this.

http://www.trade2win.com/boards/dis...ert-retail-forex-trader-5400.html#post2595034

So - once you are feeling a bit more comfortable with the methodology - why not then look at the PPND strategy - ie pyramid and peel but never dump .

To do this instead of say just entering with 1 lot or $10 a pip - enter for example 3 times within a minute with a $3 then a $4 and then a $3 - still $10 a pip - but you can then scale out or peel as price pulls back rather than exit completely. So you might have taken $7 off at 10 pips and stayed with just $3 and then added another $4 as it moved up to 11 pips and then taken more off at 18 pips etc etc and then by 5 21pm decided to come out all together - with well over 50 pips at different stake sizes etc

In principle, the idea seems with merit.
My concern is how the results can potentially be skewed.
( think there was a spat about this method of "accounting" a few years back.
Actually, I may have been the instigator of it! )

If you trade 10 lots for risk of 10 pips, and exit with a gain of X pips, your risk to reward is10:X.
for example, if you make 50 pips, you have made 10:50, which is good.

However, if you risk 10 pips, and "peel";
if you take a profit of 10 pips for 7 units, and then left the 3 pips for 43 pips:

I dont think you can claim to have made "50 pips" (7 + 43).

If you take an absurd, extreme example, I could trade 10 lots:
risk 10 lots at 10 pips. total risk = 100 units.
take off 9 lots for a gain of 10 pips. (90 units gained)
take off the remaining 1 lot for a gain of 210 pips. (210 units gained)

I make that a gain of 300 "units" for a risk of 100. a reward:risk pf 3:1.
This is quite clearly different from claiming "300 pips for a risk of 10".

If you are taking additional nibbles at the market, they ought to be considered new, and distinct trades. No?

I do get the idea of parleying tight-stop gains, and using the gains as breathing space for subsequent trades, as I understand FxM suggests in his thread.

The principle you describe is fine. But to be pedantic, you should be wary of how to present the rewards relative to the true risk.

 

[itspossible]

When i traded years ago i had several methods that were really just based on common sense.
eg dow up 450 points and you believed that there may be profit taking the day after.
Dow closes and you watch the price after the close and buy positions over 3 hrs at 1 dollar per point.
you have 5 positions at 1 dollar per point all with stops on each position.
Several hours later the dow has dropped by 80 points.
you then buy 1 back and make your profit.you then have 4 positions and you can alter stops etc.i think this is similar.it seems logical as long as you dont go crazy and have too many positions.

 

[trendie]

fair enough.

 

[timsk]

When i traded years ago i had several methods that were really just based on common sense.
eg dow up 450 points and you believed that there may be profit taking the day after.
Dow closes and you watch the price after the close and buy positions over 3 hrs at 1 dollar per point.
you have 5 positions at 1 dollar per point all with stops on each position.
Several hours later the dow has dropped by 80 points.
you then buy 1 back and make your profit.you then have 4 positions and you can alter stops etc.i think this is similar.it seems logical as long as you dont go crazy and have too many positions.

Hi ip,
This sounds interesting and I have experimented with variations of this theme myself over the years. In a nutshell, it works fabulously well - until it doesn't! In my case, sooner or later I find myself with a large position on the wrong side of the market, at which point everything goes mammaries aloft. Not a problem on demo, but an absolute disaster for the anal sphincter when trading live.

With the above in mind, the inference from your post is that this is something you did in the past, but don't do now. On that basis, would I be right in thinking the approach didn't work out for you in the long run? If so, I'd be interested to hear your reasons for discontinuing with it, i.e. what are its drawbacks and limitations?

Cheers,
Tim.