In online trading business, the position describes the state of the trader when he enters the market. To put it simply, a trader enters the market as an opening position, and a trader exits the market as a closing position.
Closing a position is the process of closing the order you hold, or it can be said that it is the process of closing your position. For example, if you hold a long position of EURUSD, you actually bought the USD sold by the EUR at one point. When you want to close it, you sold the EUR and bought the USD. The remaining part of the difference and spread after settlement is your profit or loss value, which is closing the position.
In order to make a profit in trading, investors should understand the functions of these different positions and know how to operate in order to minimize the risk of loss and get the most profit from it. This time I will share some knowledge about foreign exchange liquidation.
Definition of open foreign exchange positions
Open positions (open positions or positions) in foreign exchange indicate that the trader holds a certain number of financial instruments. An open position describes an active trading state that is still open. This position also describes the open position opened by the trader, and the open position remains active for a longer period of time.
However, once you close the open position after making a profit or loss, the transaction will no longer be valid. There are two types of transactions available for open positions:
— Short or sell position
— Long or buy position
For example, a trader owns 500 shares and opens an open position. When a trader sells 500 shares, it means that the position has been closed.
Definition of closed positions
The opposite of an open position is a closed position. Closing a long position means selling the asset, while closing a short position involves buying the asset. The price changes between opening and closing positions indicate the gross profit of the position.
How to close a foreign exchange position?
— In order to close a long position, you need to sell the exact number of currency pairs to reduce the long position to zero.
— If you have a long position of 100,000$ in EUR/USD, you must sell 100,000$ in EUR/USD to reduce the holding of EUR/USD to zero.
— If the profit you get when you sell exceeds the funds paid when you buy, you will get a profit. If the income decreases, it means that you have made a loss.
— In order to close a short position, you must buy enough currency pairs to restore your trading position to zero.
How do newbies close positions?
- Stop loss and liquidation: When the stop loss and liquidation has a certain profit, the stop loss protection cost is raised, and then as the market develops, the stop loss is raised according to the technical graph until the stop loss is knocked out. This method applies to unilateral market prices. 2, the second top closing position: the second top closing position refers to closing the position when it is observed that the price is unable to reach a new high and there are signs of a fall. This method of closing a position is an improved and upgraded version of the stop-loss closing method, which can grasp the expected profit to the greatest extent.
- Retracted position closing: Retracted position closing refers to closing the position when the price reaches or is about to reach the next resistance level, without waiting for the impact result. This method is suitable for shocking market or catching a callback to grab a rebound. In the case of unilateralism, most of the obstacles are ineffective, and they must miss a lot of profits.
- Target liquidation: Target liquidation regards every order as a high odds of a gambling game. The stop loss and take profit are set at the same time when the order is placed. The profit target is at least three times the stop loss and the fixed loss amount Adjust the open position. When holding a certain profit, the stop loss protection cost is raised.