Swing Trading With An Advanced Pyramiding Strategy!

If you have been reading our previous posts, you must have realized by now the power of pyramiding. Pyramiding means when a position goes positive in a trend, you can open a new position by moving the stop loss to breakeven on the first position. By correctly building the pyramid, you can multiply your profit five to ten times. In this post, we discuss an advanced pyramiding strategy. Take a look at the following screenshot.

Swing Trading Strategy

As you can see, a strong bearish divergence pattern is appearing on the H4 timeframe. When we spot a strong bearish divergence pattern on H4, we switch to H1 timeframe. Take a look a the following screenshot.

Swing Trading Strategy

H1 timeframe is also showing bearish divergence. We enter into a short trade when EMA10 (red) crosses EMA32 (aqua) from above. Our entry is at 1.54100 while the stop loss is at 1.54400. So the risk is only 30 pips for this trade. We continue in this trade. We will be switching between the H4 and H1 timeframes. Now take a look at the following screenshot.

Swing Trading Strategy

As you can see EMA10 (red) is below EMA34 (aqua) which is an indication of a downtrend. We continue in the trade and open a second position just below the second down arrow when the Stochastic is in a overbought condition. So we open a second short trade at 1.53400. The stop loss for this second position is 1.53625. We move the stop loss to 1.53625 on the first position as well. So the risk for the second position is 22 pips while the first position is in a profit of 78 pips. As long as the downtrend continues, we will add a position whenever the Stochastic reaches the overbought zone again.

So we open the third short position at 1.52400 with a stop loss at 1.52700 just below the second down red arrow. Stochastic is once again in an overbought condition. Our risk for this position is 30 pips. We move the stop loss on the first two short positions to 1.52700. So we are in a net profit of 140 pips +70 pips -30 pips=180 pips if the price reverses and our stop loss is hit. But our stop loss is at a safe distance and the chances of it getting hit are small.

The fourth short position is opened just below the third down red arrow. Stochastic is once again in an overbought zone. The fourth short position is opened at 1.52400. The stop loss is at 1.52700 for this position. We move the stop loss on all the three previous short positions to 1.52700 as well. Now if you take a look at the first chart where we showed bearish divergence appearing on H4 timeframe. On this chart, price made a low at 1.51262. This is the level which the price action is going to revisit when it makes a bullish divergence pattern. So we place the take profit target at 1.51300. When this take profit target will be hit, our profit will be:

First position:                  220 pips

Second position:            190 pips

Third position:                  90 pips

Fourth position:               90 pips

Total profit:                     590 pips

Price moved only 300 pips but we have been able to make 590 pips in 7 days.

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