——Senior analyst at Huichacha: Dylan
As the saying goes, a man cannot be rich without external wealth, and a horse cannot be fat without night grass. The foreign exchange market is originally a high-risk and high-yield industry, and it is also a place where wealth legends are created.
Trading ideas are the same, but without good trading methods and ways to increase positions, it is not easy to achieve wealth freedom in the financial market. It is important to stick to the rules, but a perfect and reasonable increase in positions can make the transaction even better.
increase position
Trading and increasing positions is the way for our traders to quickly accumulate wealth. Fixed positions and unchanging trading entry methods will greatly reduce profits. Reasonable increase in positions, more flexible maneuverability. But the prerequisite is that the increase in positions must be carried out under the premise of controlling risks and protecting vested profits. Blindly increasing positions can only expose your own account to risk.
Increase strategy
First of all, the choice of increasing positions must be based on your own trading strategy, rather than adding positions anytime and anywhere (Martin and grid strategies can ignore the market), and it needs to cooperate with a strict position increase strategy.
Take advantage of the trend to step back and increase positions
It is worth noting that the judgment of the trend benefits from your own trading system. Different traders have different ways of judging trends, and there is no single standard for this. On the premise of determining a good trend, you must have your own standard for adding positions. There are roughly three ways to use indicators to increase positions in the market, including moving averages, trend lines, and indicators.
If the moving average is used as the basis, the position increase is based on the price action touching the moving average; if the trend line is used as the basis, the position increase is based on the price action touching the trend line; if the indicator is used as the basis, the way the indicator enters the market is Baseline for adding positions (divergence, crossover, etc.)
a. Increase position along the moving average:
It is mainly based on the support and resistance effect of the moving average. When the price hits the resistance level, it will have the opposite bullish (down) momentum.
b. Trendlines and indicators take advantage of the trend to increase positions:
The advantage of stepping back and increasing positions along the trend is that the transaction risk is small, and most of the profits of this wave of trends can be captured.
Take advantage of the trend to break through and increase positions
Breakthrough increase is also one of our common ways to increase position. Compared with stepping back to increase position, breakthrough increase has stricter requirements on funds. A little carelessness may backfire, but basically there will be no missed increase Chance.
Of course, there are different ways to break through and increase positions, and generally break through the previous high or break through the previous important pressure level. The difficulty of breaking through and increasing positions lies in the issue of true and false price breakthroughs. Because there has been no conclusion in the market on how to count as a breakthrough in the market, and there will be no fixed standard.
In my opinion, the breakthrough standard should be based on the trader's own rules. In other words, if you think the market has broken through, then go to trade the breakthrough. And we must maintain the principle of consistency, adhere to the trading strategy for a long time, and strictly implement it. After all, trading is not a one-day deal, nor is it a one-off deal.
Increase positions against the trend
Increasing positions against the trend is also a common way to increase positions in the market. Although this method is not recommended, there are many operators. It is not in line with the trading philosophy of trend traders to enter the market early when the price is not signaling a trend change.
At the same time, trading against the trend has great risks. It is not recommended to adopt such a trading method, and the common operation method of increasing positions against the trend is to increase positions by Martin, and most of the EAs on the market currently adopt this strategy. If there is a unilateral market with a large market, this method will either kill or hurt. For the gold variety on November 9, the unilateral price fell by nearly 100 US dollars. During this period, there was little callback, and the risk was extremely high.
How to add positions
The strategy of adding positions is only to solve the problem of where to add positions when we trade. Another key issue is how to increase the position. The current mainstream ways of adding positions are as follows:
Pyramid increase method
This is the most common technique used by trend traders to "chase up". That is, first buy a certain position at a certain price point, when the price rises by a certain amount, buy with less money than the first position, and then if the price continues to rise, then buy with less money, By analogy, the funds for increasing positions will decrease step by step.
Inverted Pyramid Addition Method
That is to say, when a wave of market falls by a large margin, first try to buy with a smaller position, and if the market continues to fall, buy with more funds, and so on, increasing the funds step by step. This method can minimize the cost of holding positions and help maximize profits after the subsequent market reversal, but it is very dangerous.
Equivalent (ratio) increase method
The amount of funds is the same every time you add a position, and the logic of adding a position is the same as the pyramid method. This method is relatively simple, and it is also preferred by many ordinary traders. Both rising and falling markets can be used, and different market trends and levels need to pay attention to the same as the previous two methods.
Martin's method of adding positions
Its basic principle is: if you lose money, you need to double the position; if you make a profit, you need to restore the position to the original position. This will allow you to make a profit in the end. This investment method is suitable for volatile markets, and EA is used more.
Example analysis:
Taking an account of 10,000 USD as an example, the upward trend of the euro has been established. During this period, the position was increased 3 times, with a total position of 4 lots. What are the risks and profits in different ways of increasing positions?
① Pyramid increase
② Inverted Pyramid Increase
③ Equivalent (proportional) increase
The above are roughly the common ways to increase positions in the market, each with its own advantages and disadvantages.
In short: No matter the trading strategy or the way of increasing positions, there is no absolute perfection, and don't pursue perfection. The trading and increasing positions that suit you are always the best.
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