The Psychology of Speculation by Henry Howard Harper

It was a wise custom of the ancients to build their pyramids with / the big end on the ground; but modern builders of pyramids in the / stock market have reversed this time-honored practice, and most of / them build their stock pyramids with the heavy end up; therefore they / invariably topple over after reaching a certain height. For example, / when a certain stock known as Lake Copper was selling at $5 a share a / trader bought five hundred shares, expecting to double his money on it, / as the stock was "tipped" to go up to $10. When it reached that figure, / instead of selling he bought another hundred, and put in an order / to sell the whole lot at $15 a share. Before it reached his selling / price he cancelled the order and raised it to $25; again cancelling / it and buying another hundred at $25. By this time he was convinced / that it would go to $50. He bought five hundred more at $40, then the / stock dropped back, and fearing he might lose all his gains he sold a / thousand shares at $30. Although he had lost $5000 on the last five / hundred shares he still had a profit of $4500, less commission, after / deducting the full cost of the two hundred shares still remaining. The / stock recovered to $50, and encouraged by the "street" gossip about / rich ore bodies being uncovered, with accompanying reports that the / stock would be cheap at $75, he bought back at $50 the thousand shares / he had sold at $30.

At $60 he sold five hundred shares, which he / afterwards repurchased, with five hundred more, at $75. By this time / the speculators had discovered that the mine was one of the richest / prospects in the Lake region; it was rumored that the company's stock / was being bought for control by a large mining company whose property / it joined, and the stock was "tipped" for $150. Many surmised it to be / another Calumet & Hecla, which had sold at $12 a share, and afterwards / at $1000. From here on up he "pyramided," buying a hundred shares at / every point advance, and wisely protecting his profits with "stop loss" / orders a few points under the market price. Once the market reacted / and five hundred shares of his stock were sold on "stop," after which / the price quickly recovered, and being assured that the stock had been / hammered down for the sole purpose of "shaking him out," he bought back / the five hundred shares at five points higher than he had sold it. / To prevent another similar _coup_ he cancelled all stop loss orders / and took his chances in the open market, confident that he could / not be beaten as long as he was trading on "velvet" with an original / investment risk of only $2500. When the stock reached $85 someone half / convinced him that it was time to cash in his profits, and he put in / an order to sell the whole lot at $90, including the additional shares / he should buy on the scale order up to that point. When the price / approached $90 he cancelled the selling order and put it in at $100.