Larry,
I'm sure I'm missing something basic, but I'm confused about how to mesh risk management and pyramding.
Let's assume I have $100K and want to only risk 1% per trade. I decide that XYZ looks like it will breakout and I want to buy. It's currently at $10 and looking at the chart, I decide that if it falls to $9 the market has told me I'm wrong and I need to get out. Setting my stop at 9 gives me $1 risk per share and I want to risk no more than $1000, so 1000 shares. To keep it clean no commissions or slippage. I start with 500 shares and spend $5000.
I make the trade and things go well. XYZ is now, 2 weeks later at 13 and I think I want to increase my position. Here's where I get confused. From what I read in the pyramiding, I would now add 300 shares making my total cost $8900. I still want to risk no more than $1000 so the least I want to get out of the trade with is $7900. If the chart shows me no new support line from where I set my initial stop, I'm caught between raising my stop arbitrarily to $10 to keep my risk where I want it or increase my risk to $1700 and keep my stop where it is.
I'm sure there is something simple I'm missing. I appreciate the time you take to read and answer all these questions. I learn a lot from you.
Howard

Howard,

If you ask ten people I'm sure you will get ten answers because there is no one right answer. But I can tell you what I would do. When my choice is risking more than I want to risk because support is too far away and and placing an arbitrary stop for money management purposes, I'll choose the money management stop every time. Managing risk is far more important than stops that we think make sense. If I think the arbitrary stop is too close then I would just not add the position.

If the above is as clear as mud let me know and I'll try to explain it in a different way.

Larry

Larry,
That's a great answer because it just steps outside of all those details and tells me what the priority is. You also are letting me know that there is nothing wrong with arbitrary stops if needed. Sometimes we get caught up in the details and forget the basics. Thanks,
Howard