Paper lots, stop orders, and pyramids as a Wyckoff apprenticeship

The sequence before later lots

The archive specifies a long paper-trading record, a first cash stage of tiny lots, and a stop order set before entry. Later lots are not part of that opening stage.

Editorial reading: a Wyckoff chart condition is a hypothesis that must survive a paper ledger, a tiny equal-lot live test, and a pre-set stop order before any add-on size is allowed.

Paper trading before cash

Paper trading is specified to last through 50 to 100 fully recorded transactions. Stop orders, commissions, taxes, and net results are treated as if a broker were involved. Cash is not risked until that record is complete.

Equal lots in the first cash stage

The first cash stage is limited to 10- or 15-share lots regardless of account size, so live risk tests judgment rather than lot size.

Live selections are split into several equal lots, the same share count in each selected issue, and only in size that can actually be watched. Early gains are reserved to fund larger lots later rather than to expand size immediately.

Daily study and the period of preparation

Study is framed as about one focused hour a day on market position, trend, turning points, and names ready to move. One well-chosen monthly commitment is preferred to daily activity that nets a loss.

Short sales are practiced on paper until they feel as routine as longs. Entries wait until the period of preparation ends so capital is not idle for many days or weeks.

Risk fixed by a stop order

Risk is fixed before entry. A setup is treated as worthwhile only if prospective gain is several times that risk. A stop order is always used so a small error cannot expand. The stop order is a pre-placed exit that caps the loss decided before the trade is opened.

Pyramiding only after a remaining move

Pyramiding, adding later lots only after price moves in favor, is allowed only when conditions imply a remaining 10-to-15-point move. Add-on lots use automatic limit orders. A stop of three points or less is trailed so later lots never loosen the original bound.

A position that moves against the trader is not increased to average cost. Averaging is forbidden. The prescribed response is to let the stop order close the error.

Close on the same reading

A trade opened on a chart reading is closed on the chart. A tape-based trade is closed on the tape. A later neutral reading, a chart or tape state with no clear up or down implication, is a reason to flatten whether the result is a gain or a loss.