Currency in the flexible use of Stop and Limit Money Tips

Category: Money tips Release Date: 2006-12-26

"Forewarned is forearmed and without prejudging the waste" in the secretive volatile currency markets before, if you want to keep the winner's position, each sale of the former should be careful to develop a good operational plan, and strictly according to plan implementation, prepare for possible accidents, learn to stop and set up profitable liquidation of our success is undoubtedly necessary.

And other financial markets, the foreign exchange market when the exchange rate go up, people are always subjective hopes and has another one up until open positions; when the exchange rate falling, there is always a subjective take it for granted that the dollar still goes much higher up. The former is a hope to all the profits earned in hand, the exchange rate reached a peak when sold, this greedy and typically results in changes to lose money to make money; the latter due to luck and do not know how to lose less when the win, lose little when the profits of the reason, the final makes the loss of an infinite expansion of the formation of huge losses. Undeniably, this is the weakness of human nature --- greed and fear are at play.

Why Quilt?

Quilt in the foreign exchange is always inevitable, but never let a mistake to become a fatal blow, it will be impossible to survive in the foreign exchange market, so how to deal with hold-up of investors must be to grasp. Hold-up, especially the high hold-up, the most effective solution is to stop in time. In general, it is recommended when buying at the same time set a stop point. After buying up the exchange rate is not going down, down to a certain extent, there must be less than the price of buying stop-loss selling in order to avoid price continued to fall to the self-inflicted greater losses.

The novice entering the currency markets due to lack of risk awareness, once the quilt is often short-term for the long-term changes, resulting in more sets of deeper inextricable situation, and some investors even contrarian for the blind to cover short positions smoothing costs low, the consequences are unthinkable . If timely stop, and regain the initiative, the next one will be able to seize market opportunities, quickly recover and make value-added funds.

While hold-up would cause the psychological loss of trade pessimism, however, after the blindly optimistic earnings also had committed a fatal error. No one in the foreign exchange trend will never run down, there must be dropped after a spectacular, if not a profit out of the game often竹篮打水一场空. How to earn as much as possible circumstances in order to save the book sale profits, and also has become Chaohui operations an important part of a reasonable set-point profit open positions will be resolved this issue.

The establishment of the correct stop and limit

Is there a way to ensure both the safety of funds, but also in possible to earn as much profit? The answer is yes, that is to establish the correct stop and limit. Since the establishment of stop-loss and the establishment of limit is so important, then the investors in practice how to grasp the essentials in it?

First of all, the time in the development of trading scheme must have the concept of profit and loss ratio, profit and loss ratio is expected to recognize a profit of space and the largest space deficit ratio, the correct gain or loss than More simply is "a very profitable enough to lose at least twice." Why should we set such a principle, in fact, reason is very simple, because investors can not buy 100% guarantee that the currency will rise. Therefore, in the wrong currency, the need to prevent the fall in the exchange rate derived from the erosion of profits and principal. Adoption of the principle, as long as investors do the 50% probability for money on the overall profitability can be easily added, and 50% of accuracy rate for many investors can be achieved. Specific operations, in which a profit every time under the principle of setting a minimum when the rate of 100 points, while setting the maximum for each stop when the odds should not exceed 50 points, when the loss is greater than this percentage, one immediately stop unwinding. This guarantees that every time a profit to reach 100 points, only 50 points during a loss. Even if the operation of only 50% success rate, and ultimately bound to profit.

For example, the current euro exchange rate is 1.2500, the euro if the investor to determine to rise at the same time in the buying stops, and limit the establishment of flat position. Namely, buying 1.2500 euro, set to sell 1.2600 set stop loss 1.2450. When the currency by buying up bits are determined to achieve target profit-taking, off the bag for security, without Quotes about the trend. Only really make money selling the currency in order to achieve the book profits into actual profits, or account Profit is only one side more imaginary. There are many strong currency is rising without any sign of circumstances, because of the economic data or unexpected events fall suddenly reversed, in order to ensure that the book profits are not lost, you should use the above setting price limits the principle of open positions .

Actual operation, you can also take a more proactive method of unwinding limit, that is, we often said, only profit. If investors, after buying a certain currency, and the prices are really as predictable as up, you can use only the surplus approach has been to keep the profits. For example set the rate of 100 points, when the exchange rate once they reach the target, and the prices may be even higher than the original estimate, when mechanically unwinding is apparently undesirable, may be caused by a greater loss of profits continue to rise . So how? The correct way is to limit the original revocation, to stop up to 1.2600, as if the new deal, if not a stop bit stop-loss but a profit, it is called only the surplus.

We also use the earlier example: the original limit price is 1.2600 euros unwinding, if goes up strong, is expected to have room to rise, it can be changed up to 1.2600 surplus places. This means that if the euro goes much higher, investors get the profits will continue to increase, you can continue to improve the profit position only to protect existing profits. If the euro fell off soon after crossed the 1.2600 trigger only a result of profit, the investors have a profit of at least 100 points. Ying-bit can be set only has the fruits of victory to keep both and do not give up to acquire more profits, which is set up only the magical effect of surplus places.