How to PYRAMID TRADES in Pine Script

g'day Traders welcome back to another
video in this video I'm going to be
building on the previous YouTube video
where we built out a Bitcoin regime
filter strategy and in this video I'm
going to share with you an answer to a
student question from the Mastery course
the student wants to know how to Pyramid
multiple trades in a single strategy so
opening multiple positions in the same
direction as an initial position they
also wanted an example of how to use a
trailing stop loss while this script
does both of those things and so I
thought I might just share this answer
with you guys because I'm sure there's
plenty of you out there who would like
to know how to Pyramid trades in a
strategy script so with that intro out
of the way it's time to let you know
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watching enjoy the video and I'll speak
with you next week
in this lesson I'm going to be answering
another student question which is could
you please do a video on the strategy
section with pyramiding more than one
trade at a time as well as an example of
changing a stop or trailing
I'm not sure how to do this well today I
will show you how to do both I've
already
covered how to to a trailing stop in
several of the scripts here and in the
indicators section there is a ATR
trailing stop tool lesson so if you want
to check them out if you're not sure how
to go about creating a trailing stop but
in today's lesson I'm going to be
building on the previous strategy lesson
I released recently my Bitcoin regime
filter strategy this strategy includes a
trailing stop and what I'm going to do
in this lesson is we're going to add
pyramiding to this strategy so if we
come down to the source code and copy
all of this jump over to the pane editor
so here we are with the script applied
to my chart now I'm not going to explain
how this script works because I've
already done a lesson on this script but
basically if you haven't watched that
lesson yet what this does is it checks
if price in this case Bitcoin if Bitcoin
is trading above its 20-week EMA and we
have several other price conditions
being met we're not other words this
regime ribbon color down here is green
when this turns green if we are not
involved in a trade the script enters
long but it only trades one position
with a trailing stop as you can see
that's what our red line is and when
price closes below that trailing stop we
exit our position so a couple of things
I want to do here the first thing I'm
going to do is change my inputs I'm
going to change the date to start
trading at 2017. that just gives a
slightly more accurate or more realistic
results because I don't I doubt many of
us have been trading Bitcoin since its
Inception but I started in 2017 so I'm
going to do that to start with I'll also
turn on our RSI momentum filter that
simplifies the script a little bit
instead of having so much green and
orange now the only time the ribbon
turns green is if Bitcoin is trading
above 70 RSI so momentum must be strong
now let's modify the script to allow for
pyramiding so to start with I'm going to
add 2 two new user inputs to the script
I'm going to add a pyramid option this
will just be a bull Boolean option on
off I'll just call it pyramid question
mark and the default value will be false
next I'm going to set an amount that
Bitcoin or any whatever Market we're
trading must rise from our first entry
before we are allowed to Pyramid I don't
want to Pyramid immediately just because
this is still green I want to only
pyramid when price has moved into my
favor by a decent margin so by default
let's make it 10 so the market must rise
10 percent
before we are permitting the script to
enter a second pyramid long position to
do that I'll create another input here
called pyramid AMT short for amount this
will be a float input and I'll title it
pyramid after X percent rise
and the default value will be 10 save
that script and that gives us our two
user inputs to start pyramiding let's
scroll down to where the script enters
our positions first of all here is our
trailing stop code all of our trailing
stop code is handled here we declare it
up here and in fact I can change this
code a little bit this will reset the
trailing stop whenever a new position is
entered I can move this to where our
exit happens so when our script exits
our open trades so when the closing
price is below our trailing stop or
below the 20 week EMA but this is our
trailing stop code here you don't need
this if you don't want it if the closing
price is below our trailing stop we exit
our position now if you wanted to use an
actual trailing stop that exits the
trade when price touches that trailer
stop rather than closes below it you
need to input this Trail stop into the
strategy dot exit function and what you
would do is you would put in all of the
regular parameters so ID equals exit
from entry equals buy we want to exit
our Buy trade and you would need to put
in stop equals Trail stop and that would
exit your trade whenever price touches
this red line but for today's lesson I'm
going to leave it as it was so we're
only going to exit our trades when price
closes below that red line and when that
happens we will reset our trailing stop
our red line here will be set to an a or
nothing and it won't draw again until we
enter a new position and once we enter a
new position this code gets executed and
we start updating our trailing stop to
lock in more profit so let me save the
code make sure there's no problems there
there we go everything's working just
fine bringing this to the front as well
so now there's several ways we can
pyramid this script we could just get
rid of this check here that would just
enable pyramiding that's all you need to
do is just not check if a position is
open there's a little bit more to it but
that's essentially what we need to do in
order to allow the script to take
multiple entries and then what you would
do is you can control your pyramiding
here in the properties settings of the
strategy script but we'll get to this in
a moment for now what I'm going to do is
rather than change this code I'm going
to add a second entry block of code
and this will be called handle scale in
pyramiding so this form of pyramiding is
scaling into a trend following position
essentially or momentum system whatever
you want to call it we are trading with
momentum and we're only pyramiding while
prices moving into our favor
um you could make a DCA a dollar cost
averaging system that pyramids this
price moves a little lower I personally
that's not how I like to trade but it is
possible to do that in pain all of these
techniques should work no matter how you
want to trade so what I'm going to do
here is I'm going to check if our
strategy dot position size is greater
than zero that means we have a long
trade open and our date filter is met so
we are trading within this start time
and end time then we are going to check
if we should pyramid so what I'm going
to do here is declare a new variable
called dist short for distance and this
will be set to
the current bars closing price
minus our entry price so to get the
entry price I will just use the entry
average price
divided by our entry price
this will give us the distance price has
moved from our entry as a percentage so
for example if I minimize this and look
at this trade here if I scale up 10 here
this bar here is the first bar to exceed
our entry price by 10 which is our
default pyramid amount
so on this bar here when we enable
pyramiding this will be the first bar to
enter a new position
and we'd start stacking long trades on
top of each other in the same direction
utilizing the same trailing stop as well
so to do this I need to check if
we are bullish so first of all are our
regular entry conditions Matt so the
market is bullish we're trading above
the 20-week EMA and our filters are met
so our RSI momentum filter is met or
we're not using the RSI momentum filter
if either of those conditions are true
either this is turned off or the current
RSI value is above this then we are
bullish and we want to not trade when
the script is in caution mode caution
mode means that volatility is picked up
see this orange bar here orange colored
thing
that's saying that the current bars low
is greater than 1.5 times the ATR
from the recent swing high so when price
action drops greater than one and a half
ATR from the recent swing High it
happens again here that means volatility
is picking up to the downside and we
want to go into defense mode and what
happens is the script raises the stop
loss even higher to lock in more profit
it's more aggressive with its protection
when the market turns to caution mode
when or in other words when momentum is
waning we tighten our stop loss that's
what these two conditions will do
finally we just need to check and is the
distance on the current Bar's closing
price from our entry price greater than
this percentage to do that we just check
is dist greater than or equal to our
pyramid amount input divided by 100. now
if you wanted to you could just change
this to 0.1 and not divided by 100 and
that will give us 10 but to make it more
intuitive I'm going to go with a whole
number here so 10 to get 10 we need to
divide 10 by 100 that will give us our
distance as a decimal so 1.0 would be
100
0.1 would be 10 so if dist is greater
than or equal to 0.1
then we want to enter a new position now
this is where things can get as
complicated as you want them to be for
today's lesson I'm just going to keep it
simple and I'm just going to keep my buy
ID the same as this by ID and what that
will do is when our trailing stop is
triggered this call here will exit all
open trades that have this buy ID if I
wanted to have a different exit reason
for each pyramided trade I would need to
change this ID to something unique and
change or add a new strategy Dot close
call for that second pyramided trade but
just for now I'm going to keep this the
same as this initial entry and all we
need to do now is set the direction so
the direction will be the same as this
one strategy.long and now when I save my
code hopefully it compiles there we go
it's fine but it's not doing anything
it's not taking any extra trades that's
because we now need to come up into the
settings menu click on properties and
increase our pyramiding Max limit so
this is the maximum amount of open
trades we can have in any given
Direction so in this case the script
only trades to the long side to the
upside we are only allowing one position
at a time and we are investing 100 of
our account balance in the each each
trade what we need to do in order to
enable pyramiding is increase this
number but unless we are using leverage
we cannot invest a hundred percent of
our account balance into two trades if
you're using leverage I could increase
this to whatever I wanted so 100 margin
for long positions I believe this allows
me to open twice as much as as my
account balance I'd have to double check
that I don't use margin in my back
testing on trading view but we can
perhaps cover that in a future lesson
but now I'm going to leave that at zero
and what I need to do since I'm not
using leverage in this backtest is I
need to reduce this
my order size since I'm using a
percentage of My Equity
I need to reduce this so that it reaches
100 when we're fully invested if it
exceeds 100 then that's unrealistic we
can't actually open that many positions
um one way around this would be to
change this to contracts or let's change
it to us tether and set this to fire uh
let's set one thousand and set
pyramiding to 10. so now we can open up
to 10 trades in our long Direction while
we are trading up as soon as our stop
loss is hit is triggered as it is here
all of these open trades get closed at
the same time I'm not going to cover
multiple exit reasons in this script
because that will just get too
complicated hopefully by now with the
amount of content in the Mastery course
and all the different examples you
should be able to build a pyramiding
script as complex as you like by just
building on the examples in the course
all you need to do is either create a
second entry block of code for your
pyramiding that does not check if the
strategy.position size is equal to zero
or simply get rid of this and and
control your pyramiding through the
properties tab here so because we're
only investing a thousand USD or us
tether in this case stablecoin in each
trade and we have a starting balance of
10 000. um let's drop this a little bit
lower let's drop it to 500. we should be
unless we take a massive loss early on
in the script and we lose most of our
account balance we should be able to
open 10 positions worth 500 us tether
each quite easily but if we're using
percentage of equity we need to set this
to whatever adds up to 100 based on how
many positions we are allowing the
script to open so if I change this to
four now I need to set my order size to
25 so each time we open a new position
we will increase our position size by 25
of our account balance now if we click
ok now you can see we are opening one
two three four trades in the long
Direction before the script stops taking
new trades and and we wait until that
trailing stop is hit and now this will
affect the performance it will um in
this case it reduces the drawdown
significantly but also reduces our
profit since we're not fully invested
early on in the in the trend
so that's one pro and con with
pyramiding is it can increase your
profitability in some cases but more
often than not it will reduce your
volatility by reducing your profit a bit
but also reducing your max drawdown
which is depending on how you like to
trade how conservative you are maybe
this is more important to you than
maximizing your profit if I turn
pyramiding off you see our drawdown more
than doubles but our profit is
significantly more so again just a
matter of preference in how you like to
trade but this is how you enable
pyramiding anyway that will about do it
for this lesson just before I wrap it up
I'll show you really quickly how to have
two separate exit reasons for your
pyramid trades let's change this to buy
two this is our ID for our pyramiding
entries and let's add a new exit reason
down here called strategy.exit
give it an ID of pyramid exit and we're
going to exit from the entry ID of by 2
which is our second Buy trade here and
what I'll do here is I will pass in our
stop equals Trail stop
and now when I click save what this
should do theoretically is when I enable
pyramiding here so if I set this to 50
and set pyramiding to two contracts or
two trades now you can see we have two
exits so we're entering our first long
trade then we're pyramiding our second
long trade and then our first long trade
exits when price closes below our
trailing stop but our second buyer trade
our pyramid trade exits when the
trailing stop is hit by Price action so
that gives us two exits here and we are
controlling the exit reasons for our two
pyramided trades uh here you can see we
entered long on this trade here our
first buy was open but we never got a
second trade opening and so when price
closed just below this red line here we
exited this trade but we never had a
second position open but yeah here we
have a second position open it gets
stopped out but our original position
continues trading and in fact we open a
second pyramid position so here is a
good example of of how complex things
you can get when you start pyramiding
you need to track obviously a lot of
moving Parts but what we have here is we
have our initial trade opening
price moves up by at least 10 percent we
open our second pyramiding trade our
trailing stop keeps Rising the lock in
profit then here price it triggers our
trailing stop then exits our pyramid
trade on this red line but then price
does not close below the red line and
doesn't exit our position entirely and
in fact it reverses keeps trading higher
now we're obviously trading well above
10 from our entry
our ribbon is green so our Market is
bullish
the script is allowed two maximum open
trades and so here we open reopen our
second pyramid trade and again that
pyramid trade gets stopped out here for
a microscopic profit and then price
closes below our trailing stop uh you
can't see it here but it would have
risen slightly on this bar here and we
get a closed below and we exit our
entire position here and that actually
increased our profitability a little bit
but it also doubled our drawdown so a
lot of things to consider here obviously
this is not trading advice it's not
investment advice it's just pure example
I'll leave the source code below for you
to play around with what I'll do is I'll
comment this out and I'll comment that
out and I'll just leave the original
code in there and I'll leave that as it
is and you guys can play around with
this if you want to a couple of examples
there I hope you found this interesting
and most importantly valuable in your
trading process your coding process and
uh yeah I'll speak with you in the next
lesson take care and good luck with your
Trading