Counter Forex Strategy
Locking positions is one of the methods of protecting a trade deposit from losses. It differs from setting a stop loss both in essence and in form. There are two types of locks - positive and negative. In the first case, traders open a transaction in the opposite direction of the first, which is currently in profit. Negative lock is the opening of a position in the opposite direction if there is a floating loss on the first order. Locking as a way to minimize risks is a dubious method, but it can be used in trading as a Forex strategy with counter transactions. How to do it?
Forex Trading Principles with Counter Transactions
It should be understood that replacing stop loss with locking is not an effective trading method. In some trading systems, this method will not only not reduce losses, but rather even increase them if the lock is opened illegally. The best way to apply a trading strategy based on the opening of counter transactions is to trade from important levels - Fibonacci, horizontal support and resistance, local highs and lows, the borders of flat corridors.
Strategies using locks work well only if there is a steady trend, so it is important to determine it correctly in order to anticipate the moments of trend reversal and the return of movement to the main direction. The Forex strategy for the trend with counter transactions involves the formation of a positive lock due to the opening of the main orders in the direction of the trend and the opening of the counter transaction when the correction approaches. How does this look in practice?
Before starting trading, you should choose the most promising financial instruments. It is recommended to trade on higher timeframes from H4 and higher, since they are more predictable due to minimal market noise. You should not risk large amounts in one transaction, since the system involves the simultaneous opening of several orders for several currency pairs. When choosing a broker, you should pay attention to the accuracy of quotes and the absence of technical problems.
The difficulty of using the system with the opening of opposite transactions lies in the need for a clear understanding of the phases of the market and the ability to predict the beginning and end of a trend, as well as its reversals. When trading at higher time intervals, a lot of time may pass until the final result is recorded in the form of money in the account. The locking method can be applied if there is sufficient experience and knowledge of technical analysis. If all of the above conditions are met, this approach can significantly increase the effectiveness of trading.