Foreign exchange trading knowledge - how to avoid major news events or data release slip point may cause losses or even burst positions
For short-term traders on foreign exchange day, sliding point is the most unsatisfactory situation. Day short-term traders position is very short, a trading day will be multiple transactions. As far as the foreign exchange market is concerned, the average daily fluctuation range of the mainstream currency pairs is generally between 50-80 basis points. According to the actual market volatility, short-term traders will lock each profit range at about 10 basis points or even lower. If the price choice of foreign exchange trading knowledge is not very reasonable and then reaches the sliding point, then it is almost impossible for short-term traders to have profitable space and suffer potential losses and transaction costs. Therefore, short-term traders pay close attention to the transaction cost and the smoothness of the sliding point on the same day. Transaction cost and transaction fluency determine the choice of short-term traders in foreign exchange trading day.
Usually, in order to avoid the occurrence of sliding point, the ultra short-term traders usually choose to trade in the market with high liquidity and volatility. It mainly includes GBP / USD, USD / USD, mainly USD / USD. /Dollar and euro / dollar are the most interesting markets for ultra short term traders. Generally speaking, the trading liquidity of these assets is abundant, the sliding point is less, and the price difference is lower.
For the band or medium and long-term traders, the impact of sliding point on the overall trading and investor sentiment is small, as long as it is not an extreme market, it can be accepted. In extreme market conditions, the damage caused by the sliding point will be devastating and the result will be uncontrollable. Foreign exchange transactions,
Within minutes of the announcement of brexit, the pound plummeted to 500 basis points, then continued to plummet by hundreds of basis points in the next few hours, falling nearly 1000 basis points across the world. If the trader is in the opposite direction of the market during brexit, the stop loss setting will be invalid in the slump market and can not effectively prevent the loss.
The average daily volatility of GBP / USD is generally around 70-110 basis points, while during the GBP crash on October 7, 2016, GBP / USD fell 800 basis points from 1.2600 to 1.1800. During the collapse of the pound, foreign exchange trading knowledge, if you choose to do more, you can smoothly enter the game, but it is difficult to leave. As there are too many short trades, the stop loss order of long position is to sell off the pound / dollar assets held, which is a short trade in the market. Similarly, in this extreme case, if a trader's short position is significantly profitable, he can close and profit at any time, because short-term trading orders are not just a single entry into the market.
[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