Many new investors in the foreign exchange market have a rudimentary understanding of the common terms used in currency trading.
So what does it mean to unwind a forex position?
Unwinding is the act of a futures trader to close a futures trade by buying or selling a futures contract with the same variety, quantity and delivery month as the futures contract held but in the opposite direction.
Generally speaking, the whole process of futures trading includes three aspects: opening a position, holding a position, closing a position or physical delivery.
The operation process of liquidation is mainly divided into two kinds, one is in the bullish market, buy, open, and then buy to close the position.
In general, traders can choose two ways to close futures contracts after opening positions: 1.
2. Keep it until the last trading day and carry out physical delivery.
A friend of mine sent me a private letter describing some of the confusion he encountered in trading. Let me take a few paragraphs and analyze them together.
One of the most important issues I face right now is position holding.
I’ve always had a thousand reasons to let myself go.
Whenever I didn’t look at the k line, my thinking would be very clear. However, as soon as I clicked the list and set the stop loss, I vowed at that time that I would not end everything manually until I stopped the profit. However, it was of no use.
Sometimes when you watch the ups and downs of the opening price of line k before placing an order, your subjective opinion will prevail, and the previous analysis will be useless!
Even if the trend comes out, I don’t have the courage to follow orders, and so on.
This little friend’s pain is something we all experience.
Today, I will analyze the reasons for this situation and try to come up with a solution.
This is often referred to as “losing your order”.
There are many reasons for “not being able to hold a single”, but never put it down to a bad mentality, or being greedy for small money.
My personal experience is that this happens for two reasons.
The first: money that should never have been made.
In trading, there is a kind of money that should not be made.
The kind of money you’d panic about making an order for.
For example, your objective judgment is up, the market has risen very high, but there is no sign of a top, and long intervention time is not appropriate.
At this time, should have rested, but a look will have a short impulse.
Dare not at first, do not do and feel a waste of a callback pity.
Shiver rushed in, missed the highest range, a period of time in the cost of the price of wandering, especially anxious heart.
I finally got a chance to make a profit and ran away.
If that’s the case, if you ask me, I don’t care.
Don’t do it at all next time. It hurts your brain cells.
Money you don’t deserve to make in the first place.
Type 2: Want to prove yourself right.
Many are eager to take a profit, not really because of how much money they made, but because of the sense of accomplishment and comfort that comes from knowing that the trade is closed — the desire to prove that they made the right trade.
If you don’t close the position quickly, what if the profit is gone and the loss is stopped?
Isn’t the deal wrong again?
If this is the case, I would like to share with you my own solution.
It’s a massage.
Of course, it can also be a lofty name – transaction evaluation of thinking logic construction.
For a transaction, many partners say this: it is a result of the evaluation of the behavior of the judgment standard.
Such criteria are not objective.
Because it’s not your actions that will necessarily lead to this.
It’s possible that I analyzed the situation, thought it over, executed the strategy perfectly, and lost money.
As a result, my cat stepped on the mouse to help me open a single to earn back.
You can’t just say, I’m so stupid, I’m worse than a cat.
If you fail the exam, your father will beat you when you get home. He thinks you must have not studied hard enough.
It’s possible that you didn’t study hard enough, but it’s also possible that the questions were too difficult for anyone to do.
On the contrary, you did very well in the exam, said the father. “Dear son, you know how to study hard.”
In fact, you chuckle in the heart, is the deskmate cheat sheet credit.
The point of this repetition is that if an action does not necessarily lead to a result, you cannot simply judge the action based on the result.
So what to do?
Look at the image below: We replace a crude binary logic (either right or wrong) with a four-dimensional dialectical logic.
Behaviourally, there is right and wrong.
In terms of results, there are good and bad.
If you study hard, your behavior is right.
Then doing well on the exam is a matter of course.
If the questions are too difficult, or if illness interferes with your performance during the exam, it is bad luck.
Bad things happen from time to time, but it’s not the norm, and you’ll certainly get plenty of opportunities to prove that you took your studies seriously.
On the contrary, if you don’t study hard and get a high score by cheating without being caught by the teacher, it is shit luck.
Dog shit luck is not normal, often walk in the river will wet shoes, the next exam will be exposed.
And what if it’s not next time but this time? Isn’t that what you deserve?
Trading is the same, you execute the opening position according to your analysis, behaviorally you have been right, you should feel a sense of accomplishment and comfort.
If you do not follow the analysis to open your position, you have made a major behavioral mistake, and you should feel guilty and guilty.
If the trade is executed correctly, the profit is natural because of the mental effort.
And if you lose money, console yourself with the fact that this is bad enough.
Be very careful if you make a profit in the case of a misexecuted trade, because this is not the norm and the market will retaliate as long as you play.
For example, if you make a lot of money by trading heavy positions, sooner or later you will return more money to the market because of heavy positions.
Therefore, the evaluation of the transaction should be two aspects and four dimensions.
Whether there is an objective basis for unwinding a position determines whether the trade is right or wrong.
Whether the deal turns out to be profitable or not determines whether the deal is good or bad.
As a trader, you can control the opening and closing, but you have to accept any possible outcome.
So, if you want to feel a sense of accomplishment and comfort, you have to do it right.
As it turns out, the profit is not in your control, so you can’t feel ashamed or guilty about it.
As a trader, if you want to solve the problem of rushing to get out of the bag, you should construct a set of objective and rational logical thinking to evaluate the trade.
If evaluated solely from the results, the trading results of losses will make traders doubt the correct trading behavior, which will affect the traders’ ability to execute the trading behavior over time, and cause greater losses, and form a vicious circle.
Only when trading behavior and trading results are evaluated separately, can we persist in executing trading behavior in the face of uncertain gains and losses.
I’m not here to say exactly how to evaluate the merits of a trade (open position).
It is easier to judge the outcome of a trade than it is to judge the activity of a trade. A gain is good and a loss is bad.
The evaluation of trading behavior is slightly responsible.
