Good evening friends, the market these days, and indeed for some time in general, has been stormy and is taking us all on these swings, and many of us have found ourselves in a market collapse, where even stops do not help you, but when this happens, many begin to chaotically average positions, the more In the event of an unexpected second drawdown, they go for liquidation, and all because they averaged all positions with the hope of getting out quickly.
Today we’ll talk to you about how to get out of such disadvantages without, of course, leading yourself to liquidation.
Of course, the most important thing is to trade across the Bank, so that even such -500% does not lead to liquidation
The most important thing is to try to use stop loss
If it has already happened to you that you have gone into the red and a good one, then you should have a strategy for getting out of such a situation, not a chaotic buyout of the bottom, but action steps
First of all, you must determine the First coin to exit MINUS! what does this mean, here is an example:
You have 5 positions open in Cons, and these are -404%, -549%, -452%, -403%, -275%
Of the given Disadvantages, our first coin during a simultaneous collapse was coin number 5, with -275%, which resisted the most, thus we should not average all positions at once, because there is a possibility of a second collapse.
How much should we average our position?
Let's say you entered into trades at $10 - then in such a minus situation, I average by 50% of the margin, in our case we average by $5
And immediately set TAKE Profit on the exit point in plus = It will show “Entry Price” Usually, after averaging by 50% of the Margin, our percentage will be reduced by 2 times, if it was -275%, then when averaging it will show you -137%~, but the Dollar Minus will remain the same.
As soon as your position is closed at No Loss by Take Profit, you can average the next closest position to enter No Loss, but not by 50% of the Margin, but by 100% of the Margin, if in our case we entered positions at 10 $ then we average by $10, but only on the condition that you closed your coin before without a loss.
This is done in order not to burden the Bank = not to increase the Risk of Liquidation
The most valuable thing for us is to preserve the trading BANK.
This strategy of gradually getting out of the Minus only works with Open Long Positions, and only works when you are in the Minus -200% and Big Minuses.
But if you see that you are going for Liquidation and you do not have the opportunity to trade in Both Sides = Hedging, then you will have to cut your positions in Minus = close the unprofitable position so that it stops dragging you to liquidation.
In financial markets, hedging (from English to hedge - “to protect”, “to limit”) is a mechanism for reducing risks by making additional transactions that cover losses from the main investment.
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In the Next Post I will tell you about Trading as a Pair or Husband and Wife, and how you can get out of Negative trades without averaging positions 💹