In this video I share two live trade setups using a pyramiding trading strategy. The goal of pyramiding into trades is to maximize profits when trading with the trend, adding onto positions at key points thus compounding profits and +R.
Here’s the transcription for this Pyramiding Trading Strategy video:
“Hello traders here.
Got another live price action trade setup on the dollar yen this time, actually got two trades, so I’ve added on to my positions.
I’m going to explain the price action analysis behind why I got in this trade, what level I bought at, why I bought here, where my stop loss was, how I’ve adjusted the first position, why I got in the second position, and my targets.
So let’s get into this.
Right here as you can see, this is my first entry on the trade, so we’re still in a bowl trend right now, so I’m, because the trend is volatile, I’m looking to buy on pullbacks, if it was a non-volatile or highly imbalanced trend, then I would be looking to trade shell pullbacks or breakouts.
But this is not, we’re in a volatile trend, so I’m looking for pullbacks to prior resistance levels, turn support, or role reversal levels.
So after forming a prior swing high here, we broke above it, stopped at about 115.50, pulled back to 114.10 roughly, went right back to the same resistance, sold back off, and then started to slow down.
The selling just sort of slowed down, you can see all these wicks here, suggesting buyers are willing to step in just above the level.
Eventually, they got to the level, so I got in on the level, I didn’t wait for the candle to complete itself, I wasn’t trading a pattern, I wasn’t trading any sort of one or two **or** pattern, or anything like that.
I bought on the level because that’s where I felt that the buyers were going to come back into the market, and they ended up doing that, they went a little bit past this here.
My original stop was right about here, it was about 46 pips below, so I got in at 114.09, my stop was at 113.63, so 46 pips, and since the market took out the prior double top and highs and went past that, then after that I adjusted my stop below here on this position.
So, why did I choose to put my position or my stop-loss on my first position right here? So, my current stop-loss is at 114.61, which is 52 pips, so, +1R is locked in.
Why did I use that location? Well, strong buying interest emerged shortly after the level here, and, you know, bought it for 6 or 5, or 6 2R, 6 2R candles in a row, so 12 hours in a row.
Impulsive buying, followed by a corrected pullback, followed by more impulsive buying. so, if you look at this leg here, compared to this one, this one’s sharper, which means that either the current bowls added on to their positions on a pullback, or new players came in to help push this thing higher.
My guess is the latter, newer players came in, adding to the positions that were long, and so, if a fair amount of new players came in and added on to their positions here, ahead of resistance, with the intention of taking it out, then I suspect that any pullbacks towards here, would be defended.
So I put mine just below this here and literally a pip below this, at +1R right now.
Now, the prior resistance here, which can be considered to be here to here, acted as support initially, the pair bounced off of 15, 115, re-attacked 116, then sold off, but then it’s kind of slowed down again a bit here, and so if we look at say, the 15 minute chart here, we can see, you know, the market was slowing down into it, some buyers were trying to push this thing back up.
It broke below 115 and made a new intraday in low, but then immediate buying ensued after that, and that didn’t really make sense to me, or it does, in the sense of if the bears are really in control, they would have been able to keep pressing and pushing lower, but they didn’t.
Bulls stepped in, so I’m guessing this was some sort of stop flush, maybe people bought at 115, and so, they bought up, market pulls back to 115 and then the buyers come in really strong and earnest and push back up again another, what, hour and a half of straight buying.
I bought once we got back up above this level, and so I got in at 115.19, and so I’m currently up 44 pips on that one, adding on to the position.
Since then, the market has held above this former resistance, now support, and so it’s going to retest the bears at 116.
Because it’s been in a large range and it continues to find buying interest, I think it’s going to make a decent challenge here, if it clears it, then I’ll start adjusting the stops to lock in more profit.
So, I have essentially added on to this position, because I expect the market to continue moving. The stop loss on the second position is just below the intraday low, and so right now, the stop is, the entry is at 1519 and the stop is at, it should show me here, the stop is at 114.87.
I literally have about a 32, roughly, 32 pip stop, so I’m up +1R on that one there.
The other position is up over +3R, so about +4R right now, and again, once we take out 116, then I’ll start adjusting the stops a little bit higher, I’ll definitely lock in some profit on the second position.
In fact, if it holds above 116 nicely, and correctively pulls back to it, then I may add on to another position here, expecting this market to continue to move.
Now in terms of where my targets are, zooming out to the weekly chart, my first target is actually the higher position, the second position that I added on to.
So, that target is right here, just under 120, I’m suspecting it may run into some resistance, just a little bit short of it, maybe 118.50, 119, but barring that it can clear 117.73, which was resistance over here, and some over here.
Then from here, I’m expecting it to make it up to at least towards 118.50, 119, and then probably run into some seller, maybe some auction players who will protect 120, so I’ll take profit just before that there.
The second position, if the market should break 120, and then they get past 121 and a half, then I’m going to expect it to challenge this peak here at 123.40, roughly. So that’s back from 2007, and so at that point, then I expect some major sellers to come back in, or at least some heavy profit taking.
So, if you look and do the math of that, going back to the two hour chart, so the first position I got in at 114.09 and that had a 46 pip stop. The final target on that one is 123.21, so we’re talking a 912 pip target, with a 46 pip stop loss, that’s a 19.8R. Will it get there in a straight line?
Possibly, possibly not. It may, the market may start to reverse here, collapse below these lows, and then trigger my stop at 1R, that’s a possibility. But, if it can take out 116, and as the market progresses, I’ll trail on, continue to lock in profit and take advantage of it. If it doesn’t, then I want to be out of the trade.
The second position up here, had a 32 pip stop, and with a target at 1990, has a 471 pip target, so we’re talking a +14.7R on that one there.
So, all in all about a +33R available on this one there, 34R, but that’s if it makes it all the way up, that could take some time, and maybe it won’t, maybe the market won’t go that far, maybe it’ll stop here, maybe it’ll stop at 117.70.
Again, my intention is to capture as much of this as I can, and add on positions when it looks appropriate, when the price action is supported of it, and if the market kicks me out, on my trailing stops, then so be it.
I’m already up at this point, you know, +3, 4R between the two positions, if the first one gets stopped out for -1R, I still have at least a couple R locked in on the second one there.
So, I hope you enjoyed this video, this price action commentary, the analysis behind it. One last point I do want to make about this here is, this trade right here, so, with the 32 point stop, the high on the day was 115.72, so I was already up about plus 60 pips on this one here.
Remember that thing I said in the last video? That you shouldn’t have to wait, more than a day to get +2R? Well this one thing puts 2R within a very short period of time.
Again, if it’s taking you days, and days, and days, and days, maybe weeks or holding a week to hit +2R, then your entries are inaccurate, and your stop loss isn’t precise enough, and you have 2R to take profits or inefficient to take profits.
There’s no reason why you should have wait days on end for +2R, it happened every single day. This one did in about 23, 24 hours, this one did it inside a day.
So I will bid you all adieu. Good luck trading everyone!”
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