MM80 - Adjusting Pyramids

Hi everyone. A great question came up in Kilo Club yesterday, and I wanted to share it and walk everyone through it. This is not financial advice. I am not a CPA and I am not a trading advisor. Let's talk about Marvell. The question was this: do I adjust my pyramids when the levels change, and what do I do if my fills never come? What if we never get down to that old 125 Marvell entry?

Here is the honest answer. That level does not really exist anymore. If I were building the pyramid today, it would look completely different, and I want to walk you through that.

First, look at the chart, because that is what drives my decision. Do I like the 50 versus the 100 versus the 200? Right now the levels are very close together. The 50 EMA is at 221, the 100 EMA is at 205, and the 200 SMA is way down at 155, and I also have support around 175. When everything bunches up like that, that zone becomes more of a range, a rectangle, than one exact target.

And what helps me decide inside that range? It is simple: mean reversion. Right now mean reversion is neutral, which is a coin toss. So the other day, when Marvell was sitting right on the 50 EMA, I looked at it and I just was not that apt to jump in, because I do not have a great reading. I do not force those trades. And that leads to the one thing I most want you to hear.