Pyramiding is a term used to describe the adding of more shares or contracts to your existing profitable position. As a stock rises in price, progressively smaller parcels are bought at higher prices until the desired position size is achieved. When done correctly, pyramiding is a highly effective way to increase your profits in a trade. It is what made Nicolas Darvas so successful and is the foundation of the Darvas method. See Darvas Method.
When planning a trade, I will usually pre-figure the total position I want to hold and will pyramid up to it, by adding 2 or 3 smaller parcels, each 1/2 of the previous one. For example, if I want to buy 7000 shares of XYZ, I may first buy 4000 and if the trade follows through according to my plan, I will add a further 2000 and finally a parcel of 1000 shares to complete my position.
“Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.” - Ed Seykota, Market Wizards