Many foreign exchange investors have more experience and skills for making orders, but the final return is not ideal, one of the big reasons is that they did not do a good job in closing positions.
The way to end a currency trade is to unwind a position, which is a crucial step in determining whether an investor can realize a profit.
Therefore, liquidation is also about skills and methods. FW Rongyu Financial Xiaobian shares with you the following methods of foreign exchange trading liquidation.
“Support” and “block” investors need to understand that in the foreign exchange market, exchange rate movements are phased, with various currency charts following certain trends.
Support is a certain price or a certain price range, under the support of the buyer is strong, so in general, the exchange rate will stop falling when it reaches the support level, and then rebound upward, thus forming a support.
Blocking is the opposite of supporting.
Therefore, the judgment and analysis of resistance and support level is very important to grasp the timing of the liquidation of foreign exchange trading.
The so-called “high sell” method is when an investor buys a currency with a profit target price.
Once that target is reached, investors liquidate their positions.
Generally speaking, most investors using this investment strategy combine the currency fundamentals and technical analysis, such as the gold division line, average line, shape and so on to determine a reasonable target price, and then wait for the currency to reach this target price and immediately close the position.
When buying foreign currency, investors should set a profit target price according to the currency they buy. When the foreign exchange market price reaches the target price, they should immediately close out their positions.
For the setting of the target price, investors can use the analysis tools such as gold dividing line, moving average and shape, and use the combination of fundamentals and technicals to analyze.
The investor must first master the method of economic fundamental analysis of the currency country, the investor set the target level must be higher than the current market price.
Take the time to study the right trends in the market. If you follow them, you can be very profitable.
Subtop liquidation Method The subtop liquidation method is to hold a position until the currency price shows a second sign of peaking and then sell.
In general, investors using this unwinding strategy often use a technical analysis to identify peak signs, mainly from the pattern and trend of currency movements.
Specifically, it is through the double top, head and shoulder top, triple top to determine the middle head establishment, decisive liquidation.
In this way, investors do not need to set a target price in advance to close the position. They can hold the position until the market shows a second sign of peaking, and then sell the position.
Investors can use technical analysis to judge the signs of the exchange rate peak, from the shape of the market exchange rate trend and trend to judge, through the trend of double top, head and shoulder top and triple top to analyze the establishment of the head formation in the middle, and then decisively close the position.
Investors need to spend a lot of time and energy staring at the market, to distinguish the true and false forms, sometimes the gains outweigh the losses, investors need to pay attention to use.
The combination of the two methods, the effect is better whether it is “high selling method” or “next top liquidation method”, can achieve quite good investment results.
Many successful investors and fund managers around the world are good at using one of these methods.
However, no matter which method is adopted, each has its own shortcomings.
For investors to use the ‘high sell’ method, they must first master a method of analyzing the economic fundamentals of the country where the currency is located, and they must set a target level higher than the current market price.
So unless you really have something unique to offer in the currency market, setting a target price can be dangerous.
And for the use of the “next top liquidation method” investors, mainly according to the exchange rate trend to judge, do not give themselves a target price.
Of course, the downside is also obvious, which requires investors to invest more time and energy in the market.
In practice, if the two methods are used together, the effect will be better.
When the price reaches the target set at the beginning of the purchase, the position should be closed immediately.
Because investors always have a reason to set a target price, and start with a target level, generally can be more sensible.
When the exchange rate keeps rising, most people’s brains tend to get hot, in order to avoid mistakes, it is better to close the position in time.
If the market really has further to go, you should have the courage to buy again, but this is a new move, and you need to re-set your target sensibly, not to be influenced by the previous order.
It is worth noting that both the “high selling method” and the “next top liquidation method” only pursue a correct liquidation, but not precise liquidation.
