Foreign exchange transaction fund management and risk control

First, foreign exchange trading stop loss method

Stop loss is one of the important means of money management and risk control. Any position needs to have its stop loss point. It is very normal to think that investors make some mistakes in trading. But if there is a mistake and it is not fixed, it will become a big mistake. As we often say, if you are not afraid of mistakes, you will be afraid of delays.

Here are a few common methods for stopping losses:

1. Fixed stop loss

This is a simple and practical method, it refers to the loss set to a fixed proportion, once the loss is greater than the proportion of timely positioning squaring. Fixed stop loss investors do not need to rely too much on the judgment of the market. Stop loss ratio setting is the key, my experience is generally controlled within 3% to 10%.

2. Technical stop loss method

Combine stop loss setting with technology, after excluding market fluctuations, set a stop loss at key technical levels to avoid further expansion of losses. Once the price is found to be broken, resolutely stop loss, mainly in the following ways.

(1) Trend stop loss method

Including the price effectively falling to the bottom of a trend, the price effectively falling below the moving average system, the price effectively falling below the tangent of the trend line, and the price effectively falling below the lower rail of the rising channel.

(2) Morphological stop loss method

Including the price falling below the head and shoulder shape, double heavy, V-shaped form of the strong line part, the price has a gap to break through the gap, etc.

(3) K-line stop loss method

Including two yin and one yang, the twilight star, wearing head and broken feet, etc.

The setting of stop loss levels should pay attention to the following factors:

1. Focusing on the general trend, we should look for previous major milestones or new highs or new lows in the technical graphics, or the market has repeatedly confirmed that it is difficult to break through the price.

2. The main analytical level in technical analysis, technical indicator prices are usually used by professional traders, and these prices also require attention.

3. Prices often emphasized by governments and officials.

4. The most important thing is to find a suitable stop loss method based on the experience gained from daily operations.

The setting of foreign exchange transaction fund management and risk control

The problem of capital management and risk is how to protect the safety of funds and how to reduce the impact of adverse trading results on funds.

There are many ways to control risk, the most commonly used is the risk percentage model by controlling the loss ratio of a single trade. The percentage model is to control the risk by controlling a fixed proportion of the total capital as the maximum allowable loss for one-on-one trading. For example, the risk control ratio is 3%. The total amount of funds is $10,000. The maximum allowable loss for one-on-one trading is 1000X3% = 300.

If there is a loss, the maximum allowable loss for the next trade with 3% of the remaining funds is (1000-30) X3% = 291. And so on. After determining the amount of loss allowed for a single trade, the size of the position can be calculated according to the stop loss range. This is an anti-equivalent martingale strategy risk control model. The position increases with the growth of funds, and vice versa. It decreases with the reduction of funds, but the risk is the same. This is a good plan for the control of losses and the growth of profits. It can maximize the speed of losses and gradually increase profits within a safe range.

We all know that if the capital loses 10%, only 10% of the remaining capital can be lost to the original capital scale. If the capital loses 20%, the remaining capital needs to make a profit of 25% to lose to the original capital scale. If the loss is 50%, the remaining capital needs to make a profit of 100% to restore the original capital scale. The greater the loss, the more difficult it is to restore the original capital scale, so it is necessary to avoid deep losses of funds. As for the maximum discount of funds, it can be determined according to everyone's tolerance for risk. My personal suggestion is that 30% is the upper limit.

If the maximum number of consecutive losses in a transaction is 10 times, then the amount of each loss should be limited to 30%/10 = 3%. Assuming that the maximum number of consecutive losses in a transaction is 6 times, then the amount of each loss is 30%/6 = 5% or more. This is a set of ideas for calculating capital management and risk control for reference.

Zero risk control method for foreign exchange margin trading

In the minds of most people, foreign exchange margin trading is a high-risk and high-yield investment. In fact, it is not. The risks of foreign exchange margin trading can be controlled, and high returns can be guaranteed while controlling risks. Most investors, under the temptation of high profits, do not carefully consider and study risk control, and pin their hopes on profiteering (2 or 3 times a year). Taking less than one in 10,000 successful profiteers as an example, the result is that most traders make major losses or even liquidate their positions. In the investment field, risk control is the most important part. Whether it is an investment master or an average trader, it will be regarded as the top priority. The first is how to keep the cost (that is, zero risk) without losing money. In this regard, investment gurus George Soros and Warren. Barphet took it very seriously and set an example for investors; Soros once said that survival is to protect the principal, and an investment loss, no matter how much loss is a step back to the "bottom line" of life, is a threat to survival. The same is true of Barphet, whose famous saying is widely circulated: "The first rule of investment is to avoid risk as much as possible and keep the principal; the second is to avoid risk as much as possible and keep the principal; the third is to firmly remember the first and second". For foreign exchange margin trading, it is especially important to keep the principal and control the risk, because it is characterized by the ability to amplify the principal by 100 to 400 times, which of course creates higher profits for the transaction, while increasing the risk. The crux of the issue is that the control is in the hands of the trader, and how to control it will be the key to the success or failure of the investment, but also the key to maintaining the principal. It is necessary to study it carefully to achieve zero risk in the transaction and maintain the principal at a minimum. This can be achieved through the comprehensive application of fundamental analysis, operation method control, capital management and technical analysis.

First, the choice of trading instruments

1. A comprehensive analysis of the fundamentals of the currency bought and sold. The basic factors affecting the strength of the purchased currency still exist and will remain the fundamentals supporting the strength of the currency for a long time (at least one year). The reasons for the weakness of the selling currency and the future economic changes of the currency will continue to weaken the currency. For example, several major factors affecting the weakness of the yen will not change in the short term, mainly in the following aspects: on the one hand, the government's fiscal deficit is huge, on the other hand, the export of traditional industries is still the main driving force for Japan's economic growth, which is greatly affected by the exchange rate, and the competitiveness has become increasingly dull.

2. Determine the long-term cycle (about 3-7 years) and short-term cycle (about 1 year) of the currency, and follow the long-term cycle as a long-term trend, using the short-term cycle as a short-term trend.

Second, use technical analysis methods to control

1. Take advantage of the trend: exchange rate changes (especially straight, such as the US dollar against the British pound, etc.), the cycle changes are obvious, the large cycle changes range from 3 to 7 years, or even longer; small cycles (including adjustment cycles) generally range from 5 months to 1 year, and are relatively stable. When trading foreign exchange, the trend should be pro-cyclical, and try not to trade back and forth on both sides.

2. Analysis of fluctuation range, duration and speed: The range of exchange rate changes is generally around 10% per year, and the large cycle changes are relatively large. Because of the long time, it can reach more than 50% -100%. The small cycle range is generally around 1000-2000 points. Amplitude analysis is conducive to the overall layout of transactions. Careful analysis of the speed of exchange rate fluctuations and the length of adjustment time provides guidance for short-term operations; the ratio of single-sided up and down fluctuation time to round-trip adjustment fluctuation time is an important factor in transactions and is a crucial part of risk control. Generally, for the four major currencies (the US dollar against the euro, the British pound, the Japanese yen, and the Swiss franc), the adjustment time exceeds 70% of the entire trading time. The exchange rate fluctuates frequently, providing a lot of opportunities for short-term operations.

III. Capital management, trading methods, and profitability

1. Fund management is the core of zero-risk control. In order to control risks and achieve the goal of capital preservation transactions, fund management is divided into three stages: the first stage, the initial stage of investment, about a month or so, the capital control is the strictest period, and the general transaction capital is controlled at about 1%; the second stage, the middle stage of investment, about 1 to 2 months; there is a certain profit and the possible loss limit that is greater than the expected increase in the order volume, at this time the capital is controlled at 1% to 3%; the third stage of accelerated profitability, when the profit is large, it is no longer a problem to increase the order volume, and the capital control can be relaxed to 3% to 5%. In addition, special attention should be paid to the position and risk factors at the exchange rate, which are also another important factor in controlling the amount of funds.

2. The transaction method is a means to achieve zero risk control. The transaction method should be determined according to the changing characteristics of the exchange rate. The details are as follows: Follow the trend and combine length and length. To conform to the trend, it is necessary to determine whether it is a large and small trend operation. The combination of length and length depends on the trend of the currency. The large unilateral trend is mainly long, generally short-term.

3. The level of profitability mainly depends on the analytical ability and operation method of the investor. Soros mainly used real transactions in the early years of foreign exchange trading, and could still achieve more than 20% profit every year. Under normal circumstances, as an investor with some experience in foreign exchange margin trading, it is relatively easy to achieve an annual profit level of more than 30% if you can operate according to the appropriate method, and it is not too difficult to achieve a profit level of more than 100%.

Position management

Position management is very important in the field of financial investment, once the use of funds and not too much, not too little, too much use if the loss caused by the loss is too large, too little use may waste a good opportunity, in a word is to stay in the mountains without fear of firewood burning, personal single style is more cautious, a use of capital is less than the current amount of capital corresponding to 1/10 hand plus 1 hand, that is to say 10,000 dollars within the most one hand, 10,000 dollars~ 20,000 dollars at most one second hand, and so on.

Second, strict stop loss

In order to effectively control risk, so as not to risk a single loss and may be trapped for a long time, it is necessary to set a stop loss at the same time every time you place an order, whether it is short-term, medium-term, or long-term, so that you can effectively control the risk and gain profits.

III. The best time to enter the market

The best trading hours in the field of foreign exchange and gold are roughly the same. From 3:00 to 6:00 in the afternoon, the European session opens in the morning, and the market starts to fluctuate greatly. From 8:00 to 12:00 in the evening, the European session opens in the afternoon, and the American session opens in the morning, and the market starts to fluctuate violently. Therefore, during the morning and noon, the market fluctuates less, and the upward trend may suddenly fall sharply in the European session. Therefore, in order to be strictly cautious, you must enter the market at the best trading time.

Fourth, if you lose once within a trading day, you are not allowed to make a second order.

If you fail to place an order for the first time within a trading day, experienced and technical analysts will inevitably have a bad psychology such as turning over the book. If you continue to try to place an order for the second time, you will inevitably continue to lose money due to psychological reasons. Therefore, in order to be cautious, you should adjust your mindset after the first failure within a day, take a short break, and look forward to future operations.

Do not enter or position squaring before the release of important data

Before the news is promulgated, the general market will be in a stable adjustment state, because short-term investors are loyal to copying data, and the quality of the data can only be known after the data is promulgated, so if the short-term operation is for the sake of caution, it should be important before the data is promulgated.

Six, no pending transactions

The so-called pending order transaction refers to a long-short transaction that investors hope to conduct when the price of the operated commodity has not yet reached the designated seat and the investor expects to reach the designated seat. For example, the current exchange rate of the pound is 1.9000, and the investor places an order at 1.9050. At this time, if the exchange rate can really reach 1.9050, the pending order will take effect. Nowadays, many investors and even traders use pending orders to trade, but I personally think that pending orders are very dangerous. For example, if the pound is raised by a big sun line from 1.9000 to 1.9050, if the pending order is completed, the consequences will be unimaginable. In fact, many traders' thinking is that the pound is already very high, and it is impossible to rise. However, this speculation is based on assumptions. No one knows what will happen, and the pending order can be replaced by real-time trading. That is to say, if the pound can really rise to 1.9050 and then start to fall, it is not too late to place an order. Why risk a pending order?

Seven, there is no guarantee of winning

The so-called stop-win is when the operating commodity price reaches the profit target expected by investors and the profit is automatically positioned squaring, why not stop-win, the reason is the same as no pending order, because the commodity price may be much better than expected development, and the analysis is fully technical to judge the maximum profit level.

Eight, add warehouse

In order to maximize profits on the basis of risk control, you can generally increase your position when the market is obvious and on the basis of profit, and the increase must comply with the law of the pyramid.

Nine, lose small money and make big money

The mechanism of making money in financial marekt is the same, that is, when making a single order, you must make a full profit, and when you lose money, you must lose a small amount of money and admit defeat.

Start with short-term profits in the medium and long term

Generally, in the financial marekt single way can be divided into short-term, medium-term, long-term, three ways can be used flexibly, but in the long-term, personal think should not be at the cost of large stop loss but should be short-term profit for a good start and further long-term fishing.

Eleven, do more mistakes

More means not to make orders frequently, because every order is orchestrated, and it is a huge war. Generally, it is enough to make a single order with the best energy and the greatest confidence every day. Frequent battles can easily lead to a decline in attention, and relaxation of thinking further leads to losses.

Twelve, maintain good health

Operating the foreign exchange and gold markets is a good job for energy and health. Any minor discomfort in energy and health can lead to unexpected losses. Therefore, it is necessary to exercise regularly and maintain a good mood.