In foreign exchange trading, the techniques of stop-profit and stop-loss are always mentioned frequently. However, many friends have found that even after reading so many reasons, they still will not set profit and stop loss and will not trade. How to do?
Today, I will break up some common knowledge of stop-profit and stop-loss in foreign exchange transactions, break it apart for anatomy, and hope to help everyone know what it is, understand it better, and truly use it flexibly.
What are the foreign exchange stop loss and profit techniques?
First of all, you must plan the largest loss of each of your orders. For example, 5% means that you have 10,000 US dollars, and the maximum acceptable loss for each transaction is 500 US dollars.
Then use 500 to calculate the stop loss of the current order you want to make.
Two methods, the first fixed lot size: For example, you buy 1 lot for all trades, and then see how many dollars per point of your trading variety fluctuates, you can get the maximum number of points you can bear, which is the stop loss level.
The second method is to set stop loss and stop profit according to the important support and resistance levels of the current market. For example, the current market gold is 1300, and the disk analysis is bullish. The position of 1290 is an important support point. Then it is a fluctuation of 10 dollars, and then divided by 500 dollars Use the fluctuating points to get a reasonable lot size, and place an order to stop loss. At the same time, observe whether the stop loss position is reasonable. The ratio of stop loss and stop loss is recommended to be 1:1.5/2, and the minimum should not be less than 1.
- Understand that the money must be compensated
Everyone comes to the foreign exchange market for the purpose of making money, but it is best to set up a specific loss plan before each transaction: if the market goes wrong, at which price, how much is expected to lose… Then follow your own plans and expectations Execute the transaction.
- The money to be compensated is reasonable
First, the reasonable compensation first means that the risk ratio is reasonable.
For example, if the market goes right, reaching the next resistance or support level can earn 30,000 yuan; if the market goes wrong, you may lose 3,000 yuan. In this case, entering the market is a reasonable category even if a loss occurs.
Secondly, it is best to set the exit price after a valid support or resistance level, that is, to verify the trend before exiting the market.
- Try to avoid huge losses
When formulating an overall profit plan, the risk taken should be a small part of the total capital. The advantages of this are:
·In the case of continuous judgment errors, the smaller the loss of order failure, the greater the chance of resurrection.
·In the case of mixed judgments, if each loss is less than profit, the account must be in a profitable state.
·If the judgment is more right than wrong, if each loss is less than the profit, you will get a larger profit.
- Try to set the profit target of each wave of market to 80%
In a wave of market, we should not seek to find the key points of market changes, but to make profits by following the trend.
Although new highs continue to appear in a round of rally, it is difficult for us to judge the position of the highest point, but we can count whether the last high point has been adjusted back to 20% during the callback. Choosing to play at this point will help ensure your 80% profit target.
- Try “not making small money”
Of course, there is no problem with making small money, the problem is that it is likely to lose big because of small. Because in foreign exchange trading, what matters is not the number of profits, but the amount of profits. Paying too much attention to small money will only make you easy to “speculate” and deep-seated evil thoughts, and it is difficult to develop good trading habits.
How to set stop loss and profit for novice foreign exchange speculators?
Set stop loss according to the loss
When the current price is 5% or 10% lower than the buying price, investors in foreign exchange speculation should set a stop loss. Under normal circumstances, the stop loss for speculative short-term buying is set at a drop of 2% to 3%, and the stop loss for investment-based long-term buying has a relatively larger drop.
Set stop loss according to the support level of technical indicators
The main support levels are: 10-day, 30-day or 125-day moving average; the exchange rate crosses the upper trajectory of the Bollinger Bands; the MACD appears a green column; when the SAR falls below the turning point; the long, medium and short-term William indicators are all above -20 o’clock; when WVAD’s 5 antennas crosses WVAD’s 21 antennas; when the 20-day PSY moving average is greater than 0.53, the PSY’s 5-day moving average crosses the PSY’s 20-day moving average.
Set stop loss according to the dense transaction area
The densely traded area will have a direct support and resistance effect on the price. After a solid bottom is broken down, the original strong support zone is often transformed into a strong resistance zone. Such as the peak area of the mobile cost distribution, it is very important to set a stop loss here.
This is the end of how to set a stop loss for foreign exchange speculation. Stop loss is an instinctive reaction of foreign exchange investors to protect their investment from damage. It is the uncertainty of the market that creates the importance and necessity of stop loss. Foreign exchange investors must understand the importance of stop loss, learn to stop loss, master the method of stop loss, and use it to invest in profit.