Profit Strategies With Switching
There are times when the market moves not according to our predictions, so the position that we have opened into loss. But in such conditions we can still make efforts to turn into a profit that is by doing switching.
Switching based on word meaning is replace. In forex trading, the switching strategy is to change direction by closing the losing position and then opening the new position in the opposite direction from the closed position with the expectation that the second position advantage will be greater than the loss in the first position that has been closed.
For example:
Currently the price of GBP / USD is 1.5500. I predict BGP / USD will rise towards 1.5600. Therefore I opened a buy position.
How many hours did the GBP / USD move contrary to my prediction, GBP / USD Declining and currently at the 1.5450 level. That means my buy position loses 50 points.
After re-analysis, it turns out GBP / USD will go down to the level of 1.5350.
In order to avoid losing my day, I decided to close my buy position with a 50 point loss and open a new sell position.
After several hours it is true that the market moves according to the second analysis result is down, and now is at the level 1.5375
Finally after feeling the profit earned enough, then I closed my sell position with profit 75 points.
From the accumulation of 2 transactions above by switching, today I profit 25 points from 75 points profit minus 50 point loss.
Tips on switching strategy:
- Do the switching by opening the second position opposite to the first position only when the second profit gain prediction exceeds the loss value of the first position to be closed.
- Should do switching when big trend will be formed, that is when there is breakout band.
This forex switching strategy requires a convincing analysis, because if not convinced by the second prediction, you should only cut first position only without having to be forwarded by switching. If it is still forced we can be waved by the market and even suffered a 2-fold loss.
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