Definition
Pyramiding (Averaging Up)
Pyramiding is adding to a winning position as the price rises, scaling up exposure while the trend confirms your view.
Unlike averaging down (buying more as a stock falls), pyramiding means buying more as it rises, adding smaller tranches at higher levels so the average cost stays manageable. It is a momentum-friendly way to ride strong trends with conviction.
The discipline is to add only while the thesis holds and to keep raising the stop loss (often via a trailing stop) to protect accumulated gains. The risk is that a sharp reversal near the top can erase profits quickly, so position sizing matters.
Related terms
- Momentum InvestingMomentum investing buys stocks that have been rising strongly, on the premise that recent winners tend to keep winning in the near term.
- Trailing Stop LossA trailing stop loss is a stop order that automatically moves up as the price rises, locking in profits while still protecting against reversals.
- Position SizingPosition sizing is deciding how much capital to allocate to a single trade or stock, to control risk across the portfolio.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.