how to make profit when there are two open opposite directions?
- Thread starter hijacker83
- Start date
- Watchers 7
If the trade did not go according to your plan, it is better to close it. I would also suggest using stop-loss orders at appropriate price levels.
It's use hedging strategy, in my opinion in this case as trader they ned high patience to waiting on low support or highest resistance to open lock hedging, this required high patience maybe, but more safe than rush to open lock, and this strategy in my opinion ony waste of time.
The easiest way to give up and to cover the losses, and if there is no experience with the locks is the best option. Such things should be studied on a demo account, then transferred to a real account.
It's so good if we an practice in demo account use these strategy, but sometime will different emotion if we trade in demo account and real account, success in demo still not guarantee success in real account and to built up psychology trading hecne real account better than demo account
This makes no sense. Why should you open contrary positions and increase your risk? My broker allows opening contrary position only if the logical mode of the platform is switched on, otherwise, it uses the average net position which is the same. You can only get confused when you open many contrary positions.
Here is an example:
Let’s take a trader who makes the following three trades in a row:.
Buy 1000 EUR/USD at 1.3545
Buy 5000 EUR/USD at 1.3540
Sell 2000 EUR/USD at 1.3560
What is his position in EUR/USD at this moment? Is he in a short or long position? What will he get if he closes all those trades at 1.3570 (let's ignore the spread for simplicity)?
We can calculate each order's profit separately and then sum up the results:
(1.3570 - 1.3545) * 1000 = 2.5
(1.3570 - 1.3540) * 5000 = 15.0
(1.3570 - 1.3560) * -2000 = -2.0
———————————————————————————————
15.5 So the profit is 15.5 USD.
Instead of calculating the profit/loss of the three trades, we can do something far more elementary:
We can net the amounts and make a weighted average of the prices to keep track on one position only, instead of watching each of the above three trades separately (of course, they can be a lot more than 3).
We will add together the amount of currency bought and subtract from it the amount of currency sold in order to to get the net position :
1000 + 5000 - 2000 = 4000
You might say: What about the prices? They are all different!
That's right, but if we calculate an average price out of these three prices, we will have an exact idea of how profitable our net position is:
1000*1.3545 + 5000*1.3540 - 2000*1.3560/4000 (our net amount) = 1.353125 <- this is the average price of the position Now we can tell the P/L of those trades: (1.3570 - 1.353125)*4000 = 15.5 USD
Surprisingly, you got the same result!
I am trading with Deltastock and I use their so called conditional orders when I want take advantage of the reversal moves of the market. I place a pending limit/stop order and attach other limit/stop to the initial order. When the initial order is executed the other limit/stop order gets automatically activated. This way I can implement complicated strategies without even bothering to stay 24h in front of the computer.
Cheers!
Sometime I am like with put pending order but still on one option if buy first hence pending order also will take buy limit on certain price and still put stop loss in all my pending order, so if eventaually all hit stop loss will end with loss trade, but if active all order and get profit hence will more profit obtained.
Good point! This is how things actually happen.. You have an order executed on market price with other pending orders attached to the position. Either using net position at average price or keep separate positions, it's the same... I agree, you can only get confused by keeping many separate orders and close a profitable trade because of rash decision. I always have a long-term vision and I know exactly the price level at which I want to open or close my positions.
Hedging a position is actually like closing the position. Your only chance to win in this scenario is to close the buy or sell positions at profits and hope that the price will reverse at that exact points. It might be better to close it all and wait outside the market for new trading opportunities.
Exactly! Managing too many positions and closing them on profit is quite difficult even for an experienced trader.
Similar threads
