Most foreign exchange speculators will think that foreign exchange margin trading is a small and big deal. Then there are many opportunities to make money in this market, and there are also many opportunities to liquidate positions. In this transaction, in addition to knowing the necessary foreign exchange knowledge, you must master the position control of margin. Today I will give you a detailed introduction.
In addition to the necessary technical analysis when speculating in foreign exchange, investors still need to make a summary. There are three main reasons for the formation of liquidation during foreign exchange speculation: first, the direction is reversed; second, there is no stop loss; third, the position is heavy. The effect of these three points combined is that if the direction is reversed within a range, even if the position is light, it is difficult to control one’s trading emotions. People who are accustomed to range fluctuations will increase their positions more and more, because this will often bring back substantial profits. If the range breaks, liquidation is inevitable.
What kind of stop loss setting is better? For example, you have $1,000. For a 1-lot transaction, a little fluctuation is $10, and a stop loss of 50 points is set. When the stop loss is hit, the loss is $500, which is a normal loss. Such a big profit and big loss transaction is bound to be on the road to liquidation.
The author summed up an appropriate position ratio for your reference. The account fund is 500 US dollars, the minimum trading unit is 0.01, and the leverage is 1:200. According to Gann’s 21 trading disciplines, we can set a standard of 10% of the total principal that cannot be lost in each transaction, and the settings are as follows.
First, 0.1 lot is traded with $500, and 0.01 lot is done with $50.
Second, the stop loss of the order placed when the important opportunity is traded is 50 points.
Why is it 50 points? In this way, 0.1 lot is made for 500 US dollars, and the stop loss is 50 US dollars at 50 points. In this way, the lost funds do not exceed 10% of the total principal! This 50 points is an experience value. If you want to set a stop loss of 100 points, the position will have to be reduced by half, and you can only do 0.05 lots for 500 US dollars. In this way, if the stop loss comes out, you will lose money. The amount is also $50. This is based on the fact that each loss cannot exceed 10% of the total principal. Once you understand this principle, you can flexibly adjust your position.
Third, in the event of a trading loss, future trading positions should be lowered. Take Article 2 as an example. If the original 500 loses once in a row and reaches 450, then the number of heavy positions will become 0.09. In this way, the original 50-point stop loss loss of 50 US dollars will now become a loss of 45 US dollars. The principle that a single loss does not exceed 10% of the total principal.
Fourth, similarly, if the profit increases and the capital increases, the position can be expanded. For example, if you earn $300 and have $800, then the maximum position is 800/50=16, that is, 16 lots of 0.01 are 0.16 lots, because it is With the ratio of 0.01 for an order of US$50, US$800 is 16 US$50, so this result is obtained.
Fifth, if you think that you will lose more than 10% each time, and you want to lose no more than 5% of your total principal each time, then you should adjust your position to 100 US dollars and make 0.01 lots if the stop loss points remain unchanged. proportion.
The above is the introduction of margin position control when speculating in foreign exchange. Whether it is a foreign exchange speculator or an investor in other trading markets, it is necessary to set a stop loss point for yourself, so that when you lose, you can bear it accordingly and not collapse.
