How to build, increase and decrease positions in foreign exchange speculation?

Speculation in foreign exchange/


We can not control our own trading position in the foreign exchange market. The management of positions is actually the management of our own funds, which includes many ways, such as building positions, adding positions, building positions and so on. The management of capital and the control of risk play an important role in our market analysis.


First, how to build a warehouse


As we have said before, when conducting foreign exchange speculation, the amount of trading margin and the number of open positions of investors are directly related to our trading risk. No matter what kind of investor's account is opened, and no matter how much leverage he chooses, just like what Gann's trading rules say, at the beginning of foreign exchange dismantling, it is better for investors to enlarge the total amount of capital by only 10% of the opening position.


Second, how to increase or reduce positions


There are three ways to increase or decrease the position of foreign exchange speculation.


1. Pyramid method


In short, this method is that we have less and less additional funds. For example, if an investor has US $100000, we choose to buy US $20000 at point a, and then when the currency rises to point B, we think it will rise, but the upward space is not large, so we can choose to buy US $10000. When we reach point C, we can choose to buy US $5000. This method is pyramid plus method.


2. Inverted pyramid method


Contrary to what we said above, this method is that we need more and more additional funds. The difference between this method and the first one is that investors have more and more confidence in the currency they choose to invest in, and the amount of investment is also increasing. But right now, the risk of investment is also increasing.


3. Average addition method


This method is just like what we say, that is, every time we add positions, the funds are the same. This method is more moderate. When investors handle foreign exchange, the profit situation and market situation behind them are in between.


Above, we mentioned three methods of increasing positions. When reducing positions, these three methods are also applicable. When it comes to foreign exchange speculation,


Huimin must choose the most suitable method according to the different ways of using our funds. Similarly, when speculating in foreign exchange, these methods are only applicable to the situation where the fluctuation trend of the market is obvious, and may not be applicable when the fluctuation of the foreign exchange market is adjusted.


[disclaimer] the publication of this article by finance managers for the purpose of transmitting more information does not mean that they agree with their views or confirm their descriptions. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk

Was this article helpful?

1 out of 1 found this helpful