Pyramiding

Pyramiding, sometimes described as scaling in or anti-martingale sizing, means adding to a position that is already profitable rather than to one that is losing. Each new tranche is typically smaller than the last, and the stop for the whole position is moved up so that the combined risk stays inside the trader's original limit. The logic is that size is increased only when the market has confirmed the idea, so the largest exposure sits on the trades that are working. The cost is a worse average entry price and greater sensitivity to a sharp reversal: a pyramided position gives back several tranches of open profit quickly if the trend fails.