Securing Positions
Today we will discuss the securing of positions in Forex. I will try to put this method more clearly on the shelves. And you will decide whether to use it or not.
What is a secured position?
This is the opening of an opposite transaction, in the opposite direction, with the same lot (volume) as the first one. In a word, put a lock, while most brokers will have no margin, since counter transactions (minus, plus, zero) give zero.
Carefully read the terms of the account of your broker and what conditions he provides when locking. Choose a good broker here
securing positions is used in the following cases: if the first transaction is unprofitable, and vice versa, profitable, to transfer positions at no loss.
securing is a way to protect yourself from losses. It is psychologically difficult for a trader to fix losses, so he opens an opposite position. This is, to some extent, a stop loss.
You can fix the loss later, postpone it for later, or at least try to reduce the loss by reducing it to zero. But not everyone succeeds. The loss often increases. Not without the help of a swap and the khan of the deposit!
When there is a loss in an open position, consider the first option.The trader opens a deal to buy, and instead of a stop loss, he places a pending order to sell, 40 points below the level of the first deal. The castle has been set. Someday, it needs to be revealed.
The second case of a lock is when we transfer positions to “no loss”. In the same picture, only the first deal is open for sale, and the second one is for purchase.
In the first case, the loss is 40 points, and by definition, it is more difficult to disclose. The second one, with a profit of 40 points, means the trader can close transactions at any time and take his profit, minus the swap, if the lock hangs for more than one day.
Do not forget that the longer the secure, the more the negative swap accumulates, and when you open the lock, the margin may not be enough, the second transaction will simply close automatically, and you will incur a significant loss.
In general, this method is considered risky, and it is best not to use it for those traders who do not have enough experience in trading. There are many pitfalls. If the system implies a method of securing positions, then there should be a clear plan for exiting the castle. How do you intend to exit? The lock is easy to put on but hard to take off.
The picture below shows the exit from the castle.
The system gave a signal for the EUR/USD pair to sell. The trader went into sales and set a pending order to buy instead of a stop-loss at 40 points from the level of the open deal. But then good news came out for the euro, and it jumped into growth. A pending order has been triggered. The position has been locked.
In the screenshot, we also see where the trader opened the lock. The second deal was closed with a profit of 35 points, while the first deal went to zero. In total, the trader earned 35 points.
In the example above, the bears have the right to change the situation on the currency pair before opening a lock. You must draw your confidence from your analysis, i.e., from the system you are using.
I will also add that locks are used en masse in ATS (automatic trading systems). This is their favorite algorithm of work (robots, in a word, what to take from them).
I personally do not deal with position-securing. I tried it a couple of times, but I did not like this method. I constantly monitor the situation on the market for fear of missing a signal or some kind of hassle.
How would I work in this example in the place of a trader? I received a signal, got into sell, triggered a stop loss minus 40 points, turned over, got into buy, closed, took 35 points from the market, turned over again, got into sell, and earned 75 points.
A total of 70 points in the pocket, twice as much as the trader earned, for the same period of time and for the same signals, only fewer hemorrhoids. I apologize for the expression. And the nerves are calmer, and there is more profit.
That’s all. This is where I finish the article about locking positions. I hope you understood everything from the above. Join our Telegram channel for market updates
