Newly, in one of my articles I spoke about hedging or locking in the forex market. But this simple at first glance method of limiting losses in trading has its own “pitfalls”. They’re related to the problem of getting out of the castle for forex. It’s not easy to do, especially for beginner traders. I can assure you that it will take a lot of time and effort to get the skills to close the place properly. It’s not gonna be quick and easy to learn this “science”. Market participants have already worked out various variants of working with locks and their correct closing. The trader only has to get acquainted with them and try to apply them in practice.Today I’ll talk about two main ways to close the locks.
Exit the forex lock
Let’s focus on the most popular and effective variants.
Trend movement
We will consider the situation that often occurs in the trading of a beginner trader. Based on his own analysis of the market, he expects to complete the existing trend and change the direction of price movement. In the hope that his forecast will come true, he opens a deal against the trend. However, the market continues to move in the same direction. A trader opens a second order. It’s trendy now. Then he sees that the movement has begun in the opposite direction. How do I proceed in this case? We’re waiting for the price to come out of the castle and start the correction. We place two pending orders. The first one is under the trend correction, and the second one is in the opposite direction above the level corresponding to the extreme correction. If the price continues to move in the trend direction, the trader will have two profitable orders and one loss-making order. It remains to wait until the profit is equal to the loss and close all the orders. The disadvantage of this method is that both pending orders can trigger, and this can lead to the formation of a second lock.
Wide lock
The difference between this situation and the previous one is that
opposite orders were opened at a great distance from each other. It’s a… it’s a… it’s a…
maybe a few hundred points. And the task is to narrow down the castle.
And it can be done both by opening trades at the market price and by
of placing pending orders. The procedure is as follows. We’re waiting,
when the price returns to the lock range and is approximately equal to
the distance from open trades. We open orders in the opposite direction and
we place take-profits of the same size on them. It’s got to be like this: on
the take-profit level for the sell deal
set up a pending buy order,
and at Take Profit level for a buy transaction – a pending sell order. After one of the TRs went off,
there’ll be a second warrant and the first lock. However, the average width of the common lock will be
less.As you can see, exiting the castle on the forex market requires care, patience and mathematical knowledge to calculate the levels correctly. This method may not work for everyone. But if you’re interested in him, set up for a long time to study him.Fyodorov’s Inga22.07.2019