What is a foreign exchange position?

When a trader buys the euro against the US dollar (EURUSD) currency pair, it is actually buying euros with US dollars. We say that the trader holds a long position in the euro, and the trader holding the long position is in the market. When the euro really rises, the trader can sell his euro position back to the market. At this time, we call it liquidation.

Therefore, it is simple to understand that in foreign exchange trading, when a trader opens a position to buy a certain currency (go long), that is to say, the trader has a long position in the currency, and opens a position to sell a certain currency (short), that is The trader has a short position in the currency, and will close a long position or buy a short position.

   The essence of foreign exchange trading is to open a position to establish a position, and then close the position at a certain position to make a difference. Therefore, how to manage positions (when to open and when to close) is the most concerned issue of all foreign exchange traders.

   There are 3 ways of foreign exchange positions:

  (1) The total amount of foreign exchange sold exceeds the total “Oversold Position” of purchases

  (2) “Overbought Position” in the opposite situation

  (3) Buying and selling a “Savare Position” (Savare Position) where the total amount is roughly equal. Related reading: What is the meaning of foreign exchange slippage

  In the foreign exchange business, it is used to indicate the surplus or lack of the amount of various foreign currencies bought and sold. The bank compiles the various foreign exchange amounts that can be received or needs to be paid on the day according to the status of foreign exchange transactions of various varieties and different periods every day to see whether the receipts and payments can be balanced. If the income exceeds the expenditure, it is a long position, and if the expenditure exceeds the income, it is a short position. Long positions are debts, short positions are debts. Both long and short positions are “open positions”, also known as “risk positions” and may suffer losses from exchange rate fluctuations.

   After the opening of foreign exchange, one currency is long (long) and another currency is short (short). Choosing the appropriate exchange rate and the opportunity to establish a position are the prerequisites for profitability. If the opportunity to enter the market is good, the time to make a profit is great; on the contrary, if the opportunity to enter the market is not appropriate, it is easy to incur losses. Net position refers to the buying and selling difference between one currency and another currency acquired after the market opens. In addition, in the financial industry, there are also theories such as closing positions and position borrowing.

  How to set up a foreign exchange position when trading?

  How to set the size of the foreign exchange position when speculating in foreign exchange?

  How to set up foreign exchange trading positions? The premise of setting up a position is that I will never let any trade lose more than 1%. If my account has 100,000 USD, then I will not lose more than 1,000 USD in one transaction. To know your stop loss level, you must first imagine the level that you can accept when the trade loses, and then set your position size accordingly.

How to set the size of foreign exchange positions when speculating foreign exchange
for example:

   1. A position of 20% of the total trading capital, plus a potential stop loss of 5%, is 1% of the total capital.

   2. A position of 10% of the total capital, plus a potential stop loss of 10%, is 1% of the total capital.

   3. A position of 5% of the total capital, plus a potential stop loss of 20%, is 1% of the total capital.

  Average true volatility (ATR) allows you to understand the daily price fluctuation range and help you set up positions according to your time frame and stock fluctuations. If your opening price is 105 US dollars and the stop loss price is 100 US dollars, then the ATR is 1 US dollars, and the 5-day fluctuation period can be used to stop the loss.

   carry out position setting from its own stop loss level and market fluctuations. Your space requirement for stop loss determines the size of your position. If you control yourself to only risk a 1% loss when your trade fails, then each trade is only a trivial one of the next 100, and your emotions will be minimally disturbed. Even if you encounter a series of failures, you still have a chance to survive, so as to fight for the chance to succeed.