There are various FX trading methods and techniques, such as pyramiding and nanpinning, which are used to accumulate purchases, but what are they? And each trader has their own favorite way of fighting. Among the methods of fighting are pyramiding and nanpinning, but they actually have different meanings, so be sure to remember them.
What is pyramiding?
Pyramiting is a technique where you increase your position every time the unrealized profit of your position increases. The premise is that the initial position you held has an unrealized profit. The basic principle of pyramiding is to increase your position by riding the trend in a trending market. This technique of gradually increasing your position will make you a big profit if you win, but will result in a big loss if you miss. There are the following techniques. There are times when you can make big purchases and sales, and you can make a lot of profit. Many people use indicators to do this during important times of large movements, and win without incurring losses.
forward pyramiding
Forward pyramiding is a trading method that gradually reduces the number of additional lots purchased when buying more. The most orthodox method is to hold the first position when the trend occurs and buy more while reducing the lot if it is determined that the trend will continue. First 5 lots, then 3 lots, then 1 lot, etc.
![](https://i0.wp.com/www.worldforexintroduction.com/wp-content/uploads/2023/07/image-1.png?w=1276&ssl=1)
reverse pyramiding
Reverse pyramiding is a trading method that gradually increases the number of lots that are purchased in contrast to forward pyramiding. The advantage of reverse pyramiding is that you can buy more while seeing if the market moves as you expected, in order to reduce the number of positions you hold at the beginning. First 1 Lot, then 3 Lot, then 5 Lot and so on.
![](https://i0.wp.com/www.worldforexintroduction.com/wp-content/uploads/2023/07/image-2.png?w=1276&ssl=1)
rectangular pyramiding
Rectangular pyramiding is a trading method that buys more lots with the same number of lots as the first held position. This is a fighting style that averages the above.
![](https://i0.wp.com/www.worldforexintroduction.com/wp-content/uploads/2023/01/amc-6295169_960_720.jpg?resize=960%2C640&ssl=1)
What is Namping?
Nanpinning is when you buy more of the same stock when your position goes against you. However, the unit price may fall further, which will increase your unrealized losses. Therefore, if you get caught up in a strong trend, nanpinning can backfire and cause you to go bankrupt. This technique is used in automated trading systems (EA), and these systems are designed to go bankrupt 100% if they get caught up in a trend even once. Usually, the direction starts to move back and the results are good, but if you don’t reverse it, you will lose and it will be tough. If you don’t analyze your investments, your funds will disappear depending on the situation.
Decisive difference between Namping and pyramiding
There is a crucial difference between namping and pyramiding.
Namping and pyramiding are both methods of accumulating additional positions after the initial entry. This point is the same, but the meaning of accumulating is different.
In the case of Namping, it is a method of increasing positions while holding unrealized losses, whereas pyramiding adds more positions while holding unrealized gains.
Advantages of pyramiding
Unrealized gains may continue even after adding a position. If you go forward further, all the accumulated amount will be unrealized profit, so it will be a big profit.
Disadvantages of pyramiding
If you suddenly reverse after adding a position and turn negative, all the positions will become negative and you will lose a lot of money.
Benefits of Namping
If the price recovers, you can make a profit. Unless there is a very strong trend, the market will reverse at some point, so in the end it is often possible to make unrealized gains.
Disadvantages of Namping
If you get caught in a strong trend, you can lose the full amount by picking up. Even if you pick up while you have an unrealized loss, the unrealized loss will not be resolved, and you may end up with a big loss.
![](https://i0.wp.com/www.worldforexintroduction.com/wp-content/uploads/2023/01/cash-6287152_960_720.jpg?w=1276&ssl=1)
pyramiding is difficult
If pyramiding is done at a beginner’s stage, there is probably a high risk of full loss. Pyramiding worries about how long positions should be placed and where to close. And if it reverses, all the positions so far will be negative and you will lose a lot. Pyramitting is a common practice to look at the big picture and set it at the timing of whether or not a trend will occur.
Care must be taken with easy picking
Care must be taken with easy picking. Many Forex beginners tend to go backwards after entry and easily pick up. However, if you catch the trend, all positions will be unrealized losses and all losses will be lost. If you try to pick up the minus easily and get back the minus, you can’t take it back. If you’re going to do an easy pick-up, it’s better to cut all the positions once and the damage is shallow.
XM is recommended
XM was originally known as a forex company with too wide spreads. But this was only recently. Now there is an account type called KIWAMI account. The spread is very narrow and very suitable for trading. Therefore, this account type is highly recommended. Especially for those who trade in pounds, it is recommended because the spread is extremely narrow.
KIWAMI | Standard | Zero | |
USDJPY | 0.7pips | 1.6pips | 1.1pips |
EURUSD | 0.7pips | 1.7pips | 1.1pips |
GBPUSD | 0.7pips | 2.1pips | 1.2pips |
AUDUSD | 0.9pips | 1.8pips | 1.4pips |
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