Max profit is the main task for all traders, but everyone is trying to achieve it in different ways. The most important rule to achieve the maximization of profit is, therefore minimizing losses.
Another way to maximize profits is a method of increasing positions in long-term price movement. There is a view that if it is determined the trend and open the first position, you should not close it, and translate without loss and, after waiting for the completion of the correction to increase the first position of the additional volume. Thus, given the wave movement of the market, it is possible to maximize profits, but do not forget about the loss limits. Read forex currency trading tips for profitable trading.
Traders use margin trading for deals. Margin trading istransactions and trading on provided by the broker or dealing center loan capital. This trade involves a certain amount of collateral, which will act as loan collateral. When closing the position, the financial result is calculated as the difference between the purchase and sale of an asset, the return of the amount of collateral occurs, taking into account the loss or profit.
It is worth noting that the actual delivery of funds in margin trading is actually not. For transactions that are speculative in nature, the object of trade by itself is not interesting. Just to be able to perform trade operations, resulting in the receipt of income from currency fluctuations.
A special feature of this scheme is that it requires mandatory opposite transactions in the same amount of currency to the time difference. That is, if the first operation was to buy, then after a while it will sell, and vice versa.
What is necessary for the transaction?
The term means the necessary margin of bail, the trader must pay to a broker or dealing center account for opening a position a certain amount. This amount will also depend on the leverage that is chosen by the trader.
For example, if you use the leverage of 1: 100, the margin required shall be 1% of the total amount of the bargain. The lower the leverage, the required margin is greater, and vice versa. If you want to open a deal of 3 standard lots with the leverage of 1: 100, which amounts to 300 000 units of base currency, in this case, the necessary margin will be 1%, ie – 3000 currency units.
Losses are inevitable, but could be forecasted.
The concept involves the floating drawdown, or a real loss on the trading account of the trader, which is expressed in figures or percentages. First drawdown expressed as a loss not taken place, but when you close a losing position – the amount of subsidence is deducted from the account. If the drawdown reaches 100%, it means the loss of full deposit.
Since there is no strategy that provides only positive results of all transactions, the percentage drawdown laid in each of them. In terms of drawdown trading methods can be divided into conservative (10-15%) and aggressive (50%).
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