Trading tactics

Trading tactics

Successful traders do not rely on a stroke of good luck – their work is based only on clear market laws. That is why the achievement of permanent and successful results is nearly impossible without Forex tactics – special techniques that have already been studied and grouped into concepts. Working within the framework of a chosen strategy, trading tactics allow a trader to perform the complete control of his funds and make his dreams about a steady profit come true.

To improve his welfare, a trader, using market trading tactics, determines the trend of a transaction and its value. This is not possible without the in-depth analysis of a market and without the examination of technical factors and basic management principles. Only in that order a trader can count on a successful application of trading tactics – the full range of measures that brings market participants closers to their financial goals. When opening (closing) his positions, a trader locks in profits, being secured against any losses.

There is many trading tactics to use on Forex market – all of them work at the same principles, but differs in nuances, preferred individually be each trader.

Main Forex trading tactics:

  • In trend;
  • Pyramiding;
  • Locked position;
  • Averaging;
  • Ower;
  • Scalping (or pipsing);

In trend

Many traders consider this set of measures to be the easiest, the most reliable and the most profitable one. Such Forex tactics generates profits equal to 75% of the initial width of trend values. The key principle if this Forex tactics is to search in a chart for an ascending/descending trend and form a corridor on three points. With an ascending trend, a trader purchases from the lower bound of the corridor and locks in profits – at its upper bound. Upon that, a stop is outside the last minimum. To take all advantages of this tactics, it is quite important to spot the trend on a price chart, by specifying support (resistance) lines. Experienced financiers insist: keep 10% from the original size of a channel.


Позиция с обратным разворотом

Pyramiding

Pyramiding tactics has come into widespread acceptance among traders due to its low risks (of course, in applied correctly). This Forex trading tactics implies opening a few lots, whose number, subject to the confirmation of the correctness of the trend, is gradually increasing in the same direction. When using this tactics, the stops of subsequent positions shall be calculated on the condition that they do not cross the border of the already existing income. Therefore, each subsequent position is opened above the previous one. Another specific feature of this Forex tactics is that the first transaction of a chain can be opened or closed, but with the preservation of values of the previous one. Using this technique, a trader sets the value of a stop-loss at the same level, which reaches a mean value of two transactions when the price passes 50 or more points from the opening of the next transaction. If the price starts reversing, then all profits gained from the second trading position may even totally cover all losses. And if such the trend continues to exist, then all its transaction will reliably generate profits.


Stop-loss line

Locked-in position

Usually, traders rely on the locked-in position tactics, when the already opened position begins to inflict losses above 50-70 points, and the intensity of the price movement increases. This is exactly the time to use so-called “lock” – when, in a clearly defined point, a response transaction is being opened extremely close to the opening of an initial position. This Forex trading tactics allows traders to effectively reduce the amount of losses. For instance, if a trading position opened for sale turns out to be a loss-making one, a subsequent position should be opened for purchase. With this Forex trading tactics, the difference between points is “locked-in”, which means that the current income from one of transactions will cover all loses caused by the second one. To get out of this “lock”, a trader should estimate future dynamics of prices and close the transaction that doesn’t generate profits.


Resistance line

Averaging

Market participants believe that averaging technique is a lot easier than the above-mentioned “locks”, but remain wary, considering it to be risky enough. Indeed, such the Forex tactics requires investments in the trading process of a trader’s deposit, consequently excluding almost all risk estimation rules. There is only one thing to be mentioned in defense of this technique: following a loss-making transaction, a trader may open another, more profitable order. Another important detail: you can open such orders an unlimited number of time! But, there is a slight hitch – your deposit may dry up before the market stops to move against you. However, experienced traders want to hang on to this trading tactics. For example: a trader purchases NZD against CHF at the exchange rate of 0.9100, which then falls to the level of 0.9060, thus depriving a trader of 40 points. A trader doesn’t give up and purchases NZD at the rate of 0.9060, with a view to close his orders at the level of 0.9080. Then, on reaching this level, losses caused by the second order are covered with a profitable order, and a trader remains without any financial damage. To avoid losing their deposits, professionals recommend no to exceed the amount of risks for all orders by more than 5% and average a loss-making transaction by one order only. Anyway, such the Forex trading tactics is suitable only for professionals.


Support line

Ower

Ower is commonly used when dealing with the projected market reversal. When a market moves in the opposite direction from the trend of a current position, it often makes sense to make a double-valued response transaction. A trader closes all already opened positions (for example, if they were opened for sale), and immediately opens other positions (for purchase). In that case, having a short respond and being ready to take a prompt action, a trader gets minimal losses and obtains profits. Such the strategy makes it possible to compensate losses caused by the primarily opened position, as well as open a new transaction, but this time – in the direct line of a current trend.


Break-even point

Scalping (or pipsing)

Scalping (or pipsing) trading tactics is applied for getting profits from a large number of transactions at short time intervals and without profit constraints or risks. Therefore, traders-scalpers can carry out up to several dozens of trading transactions per day, and it is not necessary for all of them to be profitable. With this tactics, a stop-loss line is set as close as possible to the price, at which a transaction is opened – this will minimize losses in case of the faulty forecast. Scalping requires constant attention: a trader should have assiduity and patience in order to keep his transactions under continuous monitoring. Moreover, some transactions can yield heavy losses, and a trader should have stable psychology of work and posses well-crafted and carefully tested reliable strategies for scalping.


50 points are “in lock”

In fact, there is many more market trading tactics in addition to the aforementioned ones. Each one has its own special characteristics and useful features. In order to get better understanding of their working principles and accumulate basic experience, beginning traders can test the existing classic trading tactics on a demo-account. Thereafter, newcomers can enter a real market to get an authentic trading experience and make profits.

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