Trade Management
Scaling In / Pyramiding
Instead of buying full size at the first entry, buy a starting layer, then add smaller layers only after price proves the trade right. The position grows into strength instead of betting everything on the first guess.
Build the ladder
Set a starting size, how far price has to move before each add-on, and how much smaller each new layer is than the last. The ladder redraws live, along with the blended average entry price and the total dollar risk against a single fixed stop below the very first entry.
| Layer | Trigger price | Size added | Running total |
|---|
How it works
The Concept, At A Glance
- The first layer is the only unproven one. Every layer after it only gets added because price already moved in your favor, the trade has to earn the right to get bigger.
- Later layers are smaller on purpose. Adding a shrinking size each time means the average entry price rises more slowly than the stock does, and no single add-on carries as much weight as the first one.
- The stop usually stays put. The version modeled here keeps one fixed stop below the original entry for the whole position. That's simple and common, it isn't the only way to manage a pyramid, some traders trail the stop up with each add instead.
- Total dollar risk grows with every layer. Even though the average entry price is better than chasing the current price with full size, the total shares at risk against that fixed stop is larger after every add-on. Watch the "Total dollar risk" number climb as you add layers above.
Where this breaks
The stop is still the stop
A fixed stop below the original entry means the last layer added, the one bought closest to a possible turn, has the least room and the crowd of shares behind it has the most to lose if that fixed stop is ever actually hit. A pyramid that adds three or four layers before the trade turns can lose far more in dollars than the same trade taken at full size from the start with a tighter stop. Bigger position, same stop distance, bigger dollar loss if it's wrong.