Three ways to close a deal with a profit on the currency market
The lifetime of any position on the foreign exchange market consists of three stages: opening a trade, accompanying it, and closing it. All trading strategies give a comprehensive answer to the question of when to open and when to close a trade. The question of supporting an open position in the vast majority of strategies is practically not disclosed, although it can increase profit by 200% or more.
At the moment, we can distinguish the three most common ways to support an open transaction.
Method #1: Stop Loss and Take Profit
The rules of classical trading on the currency market imply the installation of two orders, which will close the open transaction without the trader's participation: stop-loss will close the transaction with a loss, take-profit - with a profit. The first method of accompaniment is based on manipulating exactly these two orders:
- Set a stop-loss order at the calculated level, and ignore the placement of a take-profit order. As a result, the possible loss is strictly limited, while the potential profit is not. This option is often used by experienced traders who constantly monitor the dynamics of an open trade.
- Do the opposite: Take Profit is set, but Stop Loss is not.. The absence of stop-loss allows the trader not to take a loss on the deposit, but to use position locking (locks) and similar methods in order to close a losing trade, at least in BreakevenThe maximum is with a profit. Such a "maneuver" is very risky and can result in large losses, up to and including the loss of the deposit. In order to use it one must have great practical experience and understanding of price influencing factors and market mechanisms.
Method 2: Using the trailing stop function
Trailing Stop is a feature built into the MetaTrader 4 trading terminal. It allows you to accompany a trade that is in the profit zone by moving the stop-loss following the price movement. Even if the price turns in the opposite direction and the deal is closed by a stop-loss, the trader will still be in the black.
Competent use of the trailing stop function allows you to use almost the entire range of the trending price movement, closing the deal only in case of a reversal or a deep corrections. Very often the trailing stop is automated, creating a trading advisor for its use.
A significant disadvantage of trailing stop is that it can only work when the trading terminal is running, so you need a VPS-server for its constant use.
Trailing Stop (Tralling Stop): do not miss profits in the market
Method #3. Hedging positions
This option is widely used in the currency market by hedge funds to reduce trading risks, but is also used by ordinary traders.
In general terms, the point of hedging is to open two differently-directed transactions for different assets.
There are many options for hedging, and some of them allow you to run up a trading deposit almost without risk, receiving increased profits by several times. This is done by significantly increasing the volume of the second open transaction, with a stop-loss on both positions is calculated and set in such a way that the trader, in any case, did not get a loss.
Agree, it is very frustrating to see a growing profit on an open trade, only to have it then close with a much smaller profit. For this reason, profitable accompaniment of a position, along with the calculation of entry and exit points from the markets, is very important to the trader. Of course, there are many other methods, such as partial closing of positions, etc. - it does not matter what exactly you will apply in your trading, as the main thing is to have a stable growth of the deposit's amount.
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