Today is Thursday, February 12 and it is day four of my sample training series.

I hope everyone is enjoying it. This series is the trading activity of just one day which you can see presents many trading opportunities to capture your daily goal.  If any one has questions, please feel free to email me.

Today’s market looks like a giant “W” formation. That is how it started off, straight down, then back up a little over half way, and then straight down again, only to shoot straight up in the last 50 minutes of trading to close at the high for the day.

As I said many times before, today’s market needed to stay above the support it was resting on and when it was broken early in the morning by over 200 Dow points, it was not looking good. Although, as I watched the market action this morning, I was somewhat anticipating a reversal before the end of the day was over. I did not have a chance to see the final push back up, but it was impressive.

If a person wanted to trade what I call “Pyramiding”, you could have added 12 orders, each with its own new buy point and stop. You just keep moving up your old stop to match the new stop from the new orders. In a strong directional move like the last hour of today, you could have cleaned up. Keep in mind, you would have to have this strategy planned out well ahead of time, so you are ready with your plan of action.

I have done this in the past, but I don’t do it that often. My current strategy is to make money a little slower and build my contract base up over time. This is a more conservative approach, but I am not totally against putting a trade on like this occasionally. If an opportunity comes up in the future, I will take it and explain in more detail the order process. When the move is finished you may have added to your position 10 times.

As an example, if you were only trading one contract you may finish the move an hour later selling 10 contracts. Each add on order is treated as a separate order and should stand on its own merit, meeting your standard buying conditions with your normal stop parameters. You do not take on any additional risk as long as the move is in the right direction and you keep moving all of your stops up.  This is called scalling in.

What I do many times is what is called scalling out.  But this is a totally different strategy for different market conditions and should be a part of your overall plan of action. Currently it is not part of mine, but it may appeal to others who like this type of trading. Not every pyramiding endeavor is going to be met with 10 add on’s but maybe 3 or 4 would be a little more normal in the context of a large run of say 8 to 10 S&P points. Today’s last hour run was good for about 28 points, that is a lot, let me tell you.