Squaring

I’d like to propose the utilization of the extension fills for squaring.

There are not many points on the chart where you can have 40+ pip reaction with a guarantee.

Say you start following rules for a change.

  • You figure a maximum personal risk.
  • You know your risk off level at the time of placing the orders.
  • If you get hedged in, you wait out the opportunity for squaring.

In real life, this is how it goes:

You open a position with 1/3 of your personal risk. The market moves against you. You add another 1/3 11 pips out. Market surpasses. You place your last 1/3, again 11 pips out. You knew at the start that you are going to be forced into a hedge.

Your risk off level should be 42 pips away (fluctuation maximum) from your 1st order, 31 pips away from the 2nd and 20 from the 3rd. With even chunks of positions you would have a draw down of 31 pips overall locked in.

The hedge would be sacred until the next projected distance level – encounter.

You are coming up against the green lines & values.

You close off the long hedge at 1.1128 and the shorts 40 pips lower (1.1088).

This way you would have some gain despite of the swaps charged in the meantime.

Now, what would happen if on top of opening up the hedge you would also add to your naked position 11-pips out (at 1.1139) another 1/3?

You already know the short exit level, so why not make that 51-pip gain?

What would happen if the market was to rally another 27 pips after going naked?

You already placing a pending short for the duration of squaring 11 pips out at 1.1405. Place another one as well 22 pips out and make that 62 pips trade as well, not?

The last such squaring opportunity happened on Friday.

The 51, 62-pip trades were not hit, but they should be taken off now that the squaring move hit its 40+ pip target.

I’ll let you figure the values on the last image.

Where do you take off your short hedge?

Where do you add to your short?

Where do you add for the 2nd time?

How much was the excess if the high came in at 1.10077?