What Trading Tactics are Universally Practiced
To date, there are a number of universal trading tactics, which are equally good work in almost all markets. Let us turn to the most famous:
• “The coup” – one of the simplest methods of trading, which is used in cases where your trading system says that it is time to exit the market, while at the same time, signals the organization of an appropriate situation to enter the market in another direction.
Another possibility is a coup – exhibiting a limit order to limit potential losses while opening positions in the opposite direction. This means that if you open a long position (the trend), but there is a chance of a sharp weakening of prices, it is rational to set a limit order to sell two contracts in a predetermined area be placed a limit order to limit possible losses. As a result of operation of this order will automatically fix a losing position with the simultaneous opening of the short sale.
• “Adding” – applies only in cases where there is already floating profit by the result of open positions, and trading system continues to signal that the situation develops appropriate for open positions in the same direction. In this case, you have the opportunity to increase investment by opening up another position in the same direction – to add.
After adding the move should be a limit order to exit from the market in the area of break-even balanced position. This tactic is reminiscent of the tactics of averaging profits, but there are some differences.
• “Income Averaging” – this tactic is aimed at increasing volumes with minimal risk.
In contrast to the tactics of the appendix, it can be used in cases where the trading system will not give a signal to the opening position. Important is the fact that the averaging should immediately pull up a limit order to exit from the market (the closure of the two positions) in the zone (or above it) averaged break-even (balanced) position. This tactic has also received extensive practical application.
• “Homogenization of loss” – the most risky investment tactics. It is used only in extreme cases. Used when the market after the opening, for example, a long position moves against you. Assume that the market is moving in unforeseen direction (weaker), has reached a certain level, but that your trading system still gives the signal to open long positions. In this case, it is possible to average the loss, opening another long position (the trading system shows an upward trend).
• “locking” – not a very common variant of tactics, because not all companies can implement it. Another point – a negative expectation of the profitability of this strategy. In this case the loss of one position will be reimbursed by the other income regardless of market direction at the moment.
This tactic was widely used and is typically used in cases where there is a need to fix the current account status without exiting the market. It is also possible to use a strong movement (causes movement in this context does not specify), when problematic to say which way it will happen. However, after the formation of trends eliminate unprofitable transaction.
• “hedging” – the most common tactics of the trade. Its essence is to reduce the risks of investing in any financial instruments by investing in another. With respect to the FOREX market, this means the opening of balanced positions on different currencies with a high degree of correlation in such a way that potential losses from the single currency were offset by income from other investments.
However, before you apply them in practice, make sure that you clearly represent their future actions and their motivation.
