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Trade
Adding to the position
In trading on the Forex adding a new volume of the trading instrument is a common technique traders involved in the "acceleration" of the Deposit. When risk has received much less attention than the conservative trading, currency speculator can consider such options in the market that previously could not afford to use it. For example, adding extra volume is not that other, as attempt to increase the size of the transaction that proved profitable.
This method works in the following way. First, the trader opens a position on the conditions of their trading system. After a while, one sees that the price has gone in the right direction, from the point of view of the strategy. Profit increases, which confirms the correctness of the decision adopted by currency speculators. The dealer may not stop, wishing to increase the pace of profit growth.
As one position of a trading instrument already exists, the user decides to open another trade in the same direction, because of this, increases the total volume of open positions (Fig.1). The price continuing to move in the direction of a speculator, would allow profits to grow faster due to the increased volume.
Of course, if the market reversal takes place, the situation for a trader would be more complex, because the increased volume of its operations would work against him. At the same time, the speculator has the ability to close all trades when total profit is equal to zero, to prevent the transition of trade in the flawed direction.
Adding in aggressive trade
So traders can determine for themselves that the fixing of the total profit it will be topped up, for example, 3 times. After three refills people will close all positions, receiving a good profit. If after the next Supplement volume price turned against the speculator, as a rule, all transactions are recorded when they reach a total of zero, as mentioned above. Thus, not earning a series of positions, a trader at least left the market without financial loss.
Aggressive trading does not involve the use of Stop Loss as well is associated with refills. In this case, even if the price go against the deals, the trader won't fix the damage, choosing the principle of "all or nothing". Adding on Forex allows you to quickly increase those positions which proved to be successful. Fearing at once to open a large volume, one first finds a small operation, and then adds a new extent. The advantages of this method:
• first transaction of a small amount checks the direction of the market
• if the price reversal happens, then the trader receives a small loss
• if the transaction is profitable, it increases its volume by opening new positions
• catching the trend can make it significantly more than when dealing with only one transaction at a time
In the fifth version of the trading terminal MetaTrader in General there is no possibility to see the individual trades in the same direction. For example, if you made the purchase, and after some time opened another Buy position, the platform will combine the transactions into one. On the chart we see only one position that is set at the average price between the first and second purchases.
Opening, for example, 10 transactions of different volumes, we still see only the total position in the list of open orders and the market price on the chart. For example, if there is one transaction with a volume of 0.1 lot at 1.3400 and a second volume of 0.2 lots at the price of 1.3490, in metatrader 5 we can see only one valid position at 1.3460 with a volume of 0.3 of the lot.
The conservatives do not add volume
In conservative trading such techniques are rare. The constant increase in the total volume significantly increases the risk in the trade, compared to initial values. Refilling is often called the opposite of averaging, because the principle of operation of a speculator in both cases are very similar. On the other hand, if averaging is often used to avoid losses, on the contrary, it is used to increase profits.
The principle of gradual increase of the total value of transactions does not allow topping up in a conservative trade. Such action inevitably would lead to the violation of the rules of money management, which try to adhere to the speculators, who are not engaged in dispersal of the Deposit.
For successful trading according to this method, the trader will have practically to accurately identify emerging market movement. In the case that the price still has to unfold, will have to quickly close deals, at least without loss.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 286
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