Trade of The Week: Textbook Pyramiding of Home Retail Group

This week’s “Trade of The Week” is a really interesting one because it provides an almost textbook example of pyramiding into a trending stock. (If you’re wondering which textbook I’m referring to, I mean my Position Trading book, of course)

The IG Index chart (aren’t they great?) illustrates it nicely:

Home Retail Group

Having established an initial £1-per-point long position in late July at a price of 73.24, I established a second position in early August at a price of 77.43 when I saw that my initial trade was moving in the right direction.

Both positions are now nicely in profit, and the best news is that most of the profits are locked-in by my two guaranteed (yes, guaranteed) stop orders at 91.71. With guaranteed profits of £32.75 on the combined positions, and with a minimum risk-to-guaranteed-stop of only £5 on any new trade, it may well be time to pyramid again. What the heck — in for a penny, in for another pound-per-point.

If you like the way the chart illustrates my existing open trades, you’ll need an IG Index account in order to visualise your own trades the same way. Or maybe an ETX Capital account, which provides something very similar.

Disclaimer: this posting is for general education only; it is not trading advice.