So. To start, let alone find out what it is and Averaging Forex trading of locking, and then consider how to apply them in practice. We touch also, and psychology, the use of these methods, and psychological stress is high and not everyone can tolerate. Strictly on the newcomers, and do not use these methods.
Let's start with the averaging. I must say that its use is clearly ignorant lead to loss of deposit. Averaging - a variant of trade, which increases the trader losing position. This means that if you went on sale, and the price has gone up over time a trader is selling again, adding to a losing position is another. Why do this? Looking at the chart of any currency pair, you can see that the price goes to kickbacks. Leveraging a losing position, the trader expects the price rollback, and it can block the second position from the first loss. The danger of this method is that the price may continue to go up, and the loss will grow is from two perspectives. The next step - this is again average. This method of trading does not use protective stops, so the deposit should be sized so that the maximum possible drawdown consumed 20-30% of the deposit.
Consider the example of the falling market. Imagine that we have assumed the continuation of the upward trend and bought a lot on a pair EURUSD, but as it turned out, it was a rush and the price has gone against us. The deal we made about the 4th of July (the left side of the figure). Further, instead of admitting their error, as recommended by some traders, we expect the market to reverse the proposed in our direction.
And July 7 market drew us a double bottom, and we assumed that the more the price goes up, so even bought a lot. The graph is a line called the "Second Purchase". Immediately after the purchase of put profit on both transactions in one place so that, when triggered, in general, was a plus. If we go to the figures, the first purchase at the price of 1.4520, and the second at the price of 1.4330. I rounded for convenience. Profit on both transactions, I set at the level of 1.4450. After a simple calculation we get the first deal will give -70 points, and the second will give 120 points. As a result, we obtain a 120-70 = 50 points. This is assuming that the price would have unfolded, but it did not happen and the price went down further.
July 12-13, drew another price bottom, the potential and we'll have to open a buy position. This time I decide to open a position on 2 lots, but it is not necessarily important to calculate the sum of the positive was triggered by profit. So. I bought another 2 lots, and the profit on all orders to set the level of 1.4260. And as we see schedule 13-14th July, my profit has worked. We calculate the profit, the first deal gave -260, -70 second and third gave gave 250 points in two lots. As a result, we have 250 * 2 - 70 - 260 = 170.
In this example, I used the story and so my profit has worked the second time. In practice, for my trading system I averaged 6 times, and the price will still go against me. In this case, I will suffer losses, and sit in the drawdown. This is the danger of this method. By my count, for use in trade averaging just need to have a margin of safety deposit 10 000 points, while better than 20 000. The trading system, I cite as an example I will not just say that if the price moves against me by 800 points, the drawdown in my deposit will be 37%. The figure is not magical, it just happened. This method allows you to trade 10-20% per month.
At a time averaging leave and go to the Averaging Forex trading. Unlike Averaging Forex are mainly psychological burden on the trader. For this reason, they should also be used according to instructions written out of the market. So. Castle - two positions open in all directions of the same size. The trader is always possible to close both positions, using a special command in the terminal MT4. This should be remembered.
The first thing that comes to mind is a novice - this is used instead of the protective stop. When firing the loss will be, but it will not be fixed. Opponents of the use of Averaging Forex trading argue that it makes no difference to put a stop or open the locking position. They are probably in their own right, arguing it makes no sense. It makes sense to consider what makes this course of events.
Red dotted line - this is our entrance, we assumed that the price will go down further and made a mistake. Price turned around and worked the counter instead of the stop order. Now, the potential loss - the distance between orders. This type of locks, to put it mildly, not very effective, but it is a plus. We did not record a loss and we have a chance to wait out the situation more clear milk and take a lucrative deal, but losing to leave in the hope that the price will come back and if we take the minus, it will be blocked by a previous transaction.
As I said above, this method is the use of the castle - it's a second chance to trade and take profits. There are various options for the disclosure of such Averaging Forex trading, but they can lead to large drawdowns. If you have not correctly calculated the first lot, and you can not begin to average out, in the absence of a clear exit algorithm, I recommend simply close both milk and forget about them.
If you already know about money management rules and entered into a deal appropriately lot, the Averaging Forex trading opens very easily. Take out lucrative deals, and a losing start to build - average out, as I described earlier in this article. There should also be aware of the need to have strength and above the deposit 10 000 points.
My method is the use of Averaging Forex, it can certainly not mine, do not claim to authorship is the use of Averaging Forex as a hedge in the averaging. How to do it try to explain.
Back to our averaging and represent a situation in which we stood up against a long trend. In this case, there is a risk that our deposit will not stand drawdown. I recommend not to wait for the situation and begin to act when the drawdown in the region of 50%, but each time it decides in the process of calculating the trading system.
Consider the situation that scared all the newbies who are trying to learn something about the average. Green Line - is the deal on the purchase. I started buying at the top and averaged down to the bottom. The problem is that we will never know, will fall further price or not. For ease of calculation, all transactions are open a lot, so profit is placed far away from the current price. If you trade based on this principle, it can be approximated in terms lots or out of its profit, while taking a big profit. But in this example, the profit to us, where he is.
So, when you open the fifth order, the drawdown on the deposit is about 1100 points. I recorded the vehicle, at a distance of 60 points from the last fifth order I locked all the transactions among Locke and put aside an order to sell lots 5th with a stop, such as 50 points. As seen from the figure he worked. After operation of the lock in our security deposit and if our nerves are ready for it, then get out of this Averaging Forex with a profit is quite simple. Consider two cases.
The first option - it opened warrant and went further down. In this case, we are witnessing, or in this case or props for little lock stop. When the trigger stop, we get a profit and of course put a Averaging Forex trading again deferred at some distance. In our case, we would have a small plus Locke and beyond just waiting to be closed orders, which we averaged.
The second option - this is when Averaging Forex warrant was hooked and immediately went back. Then, after triggering stop loss we get, and for his compensation, we should raise the profits for the buy orders at 50 points (the value of our foot). Thus, at the close of the averaged position yourself and we will refund the money lost from the castle.
Of course, to trade stories is easier than in real time. But no one said it would be easy. Again, to use this method as it is, or in another form it should be calculated to the last detail out of the market, tested and executed without emotion and improvements in the trading process. As with any other vehicle you need to perform well are your calculations, even if it seems that something is wrong.
It should be noted that before using these methods, you should see the behavior of the pair, which are going to trade. In principle there is no difference, but we must remember that markets are falling dangerously for the average, than growing. Because falling swiftly, and may not be of the rollback, which is needed to close deals. But you can work, you just need less averaged and as I noted above. All actions should be clearly marked on the paper. Then a chance of losing the deposit decreases.
Let's try to calculate the required deposit in accordance with the realities of today. Most hyped dealing centers and brokers, there are micro and mini lots. If you take on himself the minimum, then the price of one point is equal to 0.1 cents, then to work the system enough to deposit $ 10. Of course, many do not earn, but to hone their skills is sufficient.
Still, you can add that the margin of safety - I chose from subjective considerations, and to take stock of smaller, more importantly, as I noted above, have a clear plan of action and not waver.
In conclusion, we consider a positive average. It is completely safe for both the deposit and for the nerves, but it is also necessary to calculate. If you do not make a mistake with the movement, it is possible for each pullback to build a profitable position while shifting from foot of all transactions in one place so that, when triggered, profits from previous trades covered the loss of the latter. And of course feel free to count, so that more and felt a profit.
Here we should note the difference between the topping classical and presented by me. In classical refilling following orders opening smaller volumes than the first. But our situation is different. From the outset, we do not know, we reach the correct or not, so we enter a minimum lot. Further if desired. There is a mood - topped, no - we take the profit and we are working on. The main risk of topping that with a strong pullback can be left without income. The positive side is that on the movement of several hundred items in the profit can be taken 5-6 times greater than the movement. It all depends on the system settings.
Consider our example in which we averaged the negative side. Green deal - a deal to sell it, the blue line is profit for all trades. Feet I will not put in order not to overload the schedule. Assuming that I was lucky, and I was able to do so even refilling of one lot for each trade is on the move in about 570 settlements, my profit would have totaled 1770 points.
Outlined in my article, examples are built on stories and can not in its pure form to be taken to work. Anyone who decides to try out your trading system, these very powerful tools to calculate and must try on a demo account as this will be his work, and would it ever work. As I said above, the emotional pressure is great, because subsidence of the deposit may be half or more of the deposit. And in contrast to a profit of about 20% a month. Exception - is to build a good positive averaging with a large profit, but it is also not an easy matter and requires a precise sequence of actions.
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