The lock: one more time about the ways out! Anton Hanzenko.6.02.2018, 11:00 AM
Earlier an example of an exit from the lock, where the price is in its zone, was already considered. Continuing the topic of exit from lock transactions (lock), it is worth considering the situation when the price left its zone.
The situation with the price out of the lock zone is very widespread and ambiguous. In addition, such a lock has a longer period of work, which has a more significant psychological pressure on the trader.
Returning to the first article of the topic, one should remember a few moments before leaving the lock:
- It is necessary to determine the sequence of actions in advance and stick to them in the future. Even if they can lead to deliberately expected losses.
- A very important point in preparing the exit from the lock is the calculation of money management, since most of the exits from the lock imply averaging or opening of new locks, which requires free resources.
- Psychological aspect. The very process of getting out of the lock has a great psychological pressure on the trader, what one needs to be ready for.
The main difficulty of the second type of lock, where the price is outside the lock zone, differs from the first, where the price in the lock zone is that the upcoming range of trade is not known. So, with the price in the lock zone, one can assume that the price will continue to trade in the existing range or break it. In turn, the exit of the price from the lock zone poses a new important task for the trader – to determine the further trading range that lies on the shoulders of technical analysis.
Suppose that the price left the zone of the lock and is not going to return there.
In this case, we will be averaging towards the prospective trading, thereby overlapping the volume of the unfavorable transaction or at all close it, when the necessary level of positive volume is reached.
When using such a model, do not neglect the rules of averaging and stop orders. In case of using lock orders, the lock zone will be expanded, which probably will return the trader to the first type of lock with the price inside the zone.
Suppose that the price has come out of the lock zone, but after the expansion of the range will return there.
In this case we will be averaging in the opposite direction of breakthrough. For the same purpose, the negative volume is blocked. When the required level of positive volume is reached, the unprofitable transaction is closed.
When opening new lock tradings that equal the volumes of trades for buying and selling, the existing lock zone is evaluated by the upper and lower orders. After that, the situation and possible options for the exit from the lock are evaluated.
When re-opening the locks, it is worthwhile to carefully revise the money management taking into account open transactions and existing volumes. In this case, it is necessary to resort to a strategy of reducing the pledged volume, partially closing the positions.
The very process of getting out of the castle is variable and to a large extent depends on the concrete situation. Therefore, each situation must be considered individually. More information on the methods of exits from lock orders can be found in the training courses offered by Ester Holdings Inc.