A flip of losing positions is one of the most successful strategies in the Forex market. The technology is quite simple - it is necessary to close loss-making positions and open the opposite ones in order to minimize losses and get out at a profit.
However, this seemingly simple technique is not as simple as it may seem at first glance. No one can guarantee that such a re-entry will be 100% profitable.
The main idea of this strategy is based on an unpredictable movement of the market and the inability to be 100 percent sure that the opened transaction is absolutely correct. The basis for success in this strategy is the flexibility of the approach and the ability to switch quickly.
So in what situations you should turn your order?
1. In the case of breakdown of the cost of an important level. This breakdown’s direction shall not coincide with the direction in which was the opening of the transaction.
2. The corrective movement is protracted and exceeded its borders standard. Quotes moved beyond its recent high or low, and there are high chances that the price will continue to move against the trader.
3. When any important news is out, which can theoretically affect the direction of price movement, and this is confirmed in the chart movement. You can set the news feed on the trading terminal to be aware of the fundamental events.
4. When is the end of the corrective movement on older time intervals. The order should be closed, even if it is profitable, so as not to lose all that was earned.
In what situations you should not turn your order?
1. In the last hours of the local Forex working hours, which are unpredictable and there is a big risk to repeat the unprofitable entry point.
2. When the price is moving in a narrow corridor for a long time. If events develop in this way, reduce the stop order to limit losses in case of breakdown of the price against your order.
3. When everyone is waiting for important news.
4. When a trading position you want to open is opposite to the daily trend and the current movement can appear as just a correction.
To succeed at this method you must also not confuse correction with a trend reversal.