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Trade
Castle in the Forex and principles of its disclosure in the market
From all the losing trades in the Forex market to go is almost impossible. All that remains to man is to try to reduce the number of losses or their magnitude. A method of blocking damage without fixing it in Forex called the castle. It is a way to give the man a break, when the market went against his position.
Typically, the lock on the Forex put fans locking. If You are not familiar with this concept, I recommend to read articles about locking and partial locking. Today we will see how to arrange the castle and then revealed.
For a start I suggest to pay attention to the simplest market situation, when we made a deal, but it proved unprofitable:
After price turned down, the trader realizes that he was wrong, but instead of closing the deal prefer to set the lock. A sell position of the same volume as the purchase. From a speculator in the terminal enters the lock, and any movement in the market prices do not affect the capital of his Deposit.
Lock in the foreign exchange market will represent the two open positions of the same size, are directed in opposite directions. As mentioned above, it helps to stop the growth loss account, if the first transaction was incorrect. On the one hand, you can close loss, on the other, you can set opposite position and try further to resolve the situation to their advantage.
The principle of lock installation
Conclusion arbitrary open position in the castle, most likely, will not lead to anything good. Trader it is advisable to prepare for such a situation, taking into account the likelihood of adverse developments, with the first position. Please note that the illustration below, a horizontal line is green, the purpose of which will discuss below.
Trader has considered the level of the previous local minimum in the graph, determine that in case of breakdown it is necessary to consider that the market trend changes direction. When the market-level view of the currency speculator is changing, he no longer sees in this situation a good chances to continue growth.
The breakout of the lower level can be a signal for the trader on the installation of the lock on chart Forex. Next man makes a deal to sell (sell), and then waiting for an opportune moment in the market to pick the lock. This action represents the closing of one of two deals when the situation for this action is optimal. Below we will consider on what basis are defined by such moments.
The principle of opening the door of Forex
One of the biggest problems traders are deciding to trade Forex with the use of locking positions, is the proper erection of the whole structure. The fact that you can at any time just to close a profitable trade, expecting that in current market conditions it is more likely price movement towards the rest position.
Comments for the above illustration. First, the trader makes a deal on the purchase (buy), but soon is forced to form on the chart the lock, when convinced that he missed with his prediction. This is the deal to sell (sell) the same amount as the previous exchange transaction.
Then, the man watches the development of the market situation. The closing of the transaction to sell occurs when the trader using their trading system, is the point of the intended turn of the market. Fixed income sales, as shown above, and an open position remains the only buy-deal.
Emphasize that the time of the erection of the castle was chosen not by chance, namely when there is a signal for the market reversal. Only in such circumstances of closing a sale would be justified.
Next, we see that the price began to rise, and, when the signal on the change in market trends, the trader has closed his purchase. Note that to do so would have, even if the signal for the market reversal came at a time when the position would still be at a loss. An example of this situation can see in the picture below.
The size of profit and loss, of course, was taken for example (+20 PP -15 PP). In fact, it is important to remember that after opening the lock we let the remaining positions to come out of the loss, but if at this time there will be a signal of reversal of the market, it is necessary to close the deal, even if it's not out yet in profit.
Otherwise, a high probability or to see how increasing the size of the loss of this position, or re-open lockeroom position, returning to the castle.
Trading system - here You can choose the system that is called. This will allow you to effectively find points of market reversal.
Now a few words I would like to say about the castle that could be called fully closed. We are talking about the overlap volume of position, which we missed on the market. It does not fully cover the amount of the transaction, but simply reduces it, is not a small number of speculators.
Please note that the second position can be open the volume more than the first deal and less. It all depends on the circumstances in which Forex lock set. If the person just decided to reduce the amount of your purchase, for example, 0.5 lots 0.1 lot, then makes a deal to sell the volume of which will be 0.4 lots.
At the same time, the speculator may decide to "spread" on the market, why he may need a foreign exchange transaction for sale of greater volume than its open sale.
Of course, it is the subtleties encountered studying the trading method and system that uses market locks. Nevertheless, I hope that your locks have become more clear.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 642
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