Pradeepkumar,
Pyramiding is increasing a position’s size by adding to an open position. Your initial position is the largest forming the base of the pyramid, while any successive amounts are gradually less and hence the word, pyramiding.
Most novice traders understand pyramiding incorrectly.They add to a position when it’s losing hoping that the market will turn slightly and make up for their loses, this approach usually ends in disaster. If you want to implement pyramiding in your system, only add to a position when it has already made a substantial profit. Okay, thats that. Now, we need to address the question of how much to add when we are in profit.
Most of the traders implementing pyramiding MM strategy for the first time add equal amounts to positions.This gets quickly dangerous as the average price we paid for that stock(or any instrument) quickly moves up very close to the market.So, a small setback can totally wipe us out. This more so with F&O as it is highly leveraged already. So, we should add less quantity as we pyramid up.
Now that we have understood the right way of pyramiding, we should address the ever haunting beast in trading called ‘Risk’.We correctly pyramid a position but we tend to not trail our stop loss to reduce risk on the previous position(s), thereby voluntarily taking on more risk. This will also call for disaster. So, the smart way would be to scale into the position at predetermined levels and trailing the stop each time we add a new position so that we never risk more than we are comfortable with losing, or more than what we have predetermined is a good 1R value for us (1R = the amount we risk per trade).
If one is ruthlessly intolerant of losses,(remember that we are here to make money – being right is of secondary importance), then the same should apply to ones net exposure or unrealized profits. As each new incremental trade moves further into the money, the capital-at-risk expands. To reduce capital-at-risk, while at the same time ‘releasing’ new layers of now assured unrealized profits for fresh pyramiding, the stop losses should be re-adjusted. We continue the process until either the stops are hit or one is in the enviable situation of taking profits at leisure 
Having said all this, we should also be aware that there exists a trading risk that a pyramided trend ends prematurely and leaves very little profit to the trader once stops and expenses are settled compared to a trade that is unpyramided. But this is a worst-case scenario that still compares favorably with the ‘do nothing’ strategy.
Hope it helps and good luck !!
