Risk management techniques (Switching management)

The explanation below is about risk management. Trading we must be saved when the market does not move as expected. This is just one of many forex trading strategies. Maybe you fit in with this system, you can use. Okey? His name Switching Management

Switching is done by closing the position change of direction we (cut loss) that are losing money because the price moves against our predictions and then open a new position following the price moves against the hope, gain the second position will be greater than the first position that is Cut Loss .

Case Example

Mr. X predict prices will rise from 1.2000 to 1.3000
So to get the benefits he decides to buy (Buy) is now at the price of 1.2000 with the hope that prices will go up so that he could sell at a higher price / cost advantage and get the difference.
But it turns out instead of rising prices, the opposite DOWN to 1.1700!
And after a re-analysis, Mr. X finds estimates that prices will rise turns out WRONG, according to Mr. Price. X instead of going up to 1.3000 but it will come down to 1.1000.

So what should he do

Rather than fight the market price and suffer losses and, therefore prices will drop even further from now, he decided ........
Closing her current position Buy losers (Buy at 1.2000, closed at 1.1700) and then open a new position at 1.1700 Sell (with the hope that prices will come down to 1.1000).

And it turns out the price continued to fall to 1.1000 so he had the advantage 700 points (1.1700 - 1.1000) greater than the loss in the first position previously closed at -300 points (1.1700 - 1.2000).
Then he closed the Sell position and receives a profit of 700-300 = 400 points.

If you are going to Switching a good idea to consider first, for that we have some suggestions that might be useful for you if you want to or prior to switching.

• Perform SWITCHING by opening the second position opposite the first position only if losses exceed gains predicted first position to be closed.


• If it turns out the price changes were consistent with the first prediction, then you will suffer a loss of 2 times, the first position and the second position was also