Picture this; you are considering placing a trade in favour for the USD to rise against the JPY. Even though the economic data is in favour, your trusted indicator is showing you there may be a short term selling pressure. Either move for the pair will likely be big but you don’t want to gamble or lose any money by getting it wrong, what do you do?
Here is something which I do when I am receiving cross signals for the same market. Before I place a trade I want to be 200% sure that I will make money and that means my trusted indicators have to be pointing in the right direction. But in reality, not everything sits together perfectly most of the time and there are times when you have to be “in it, to win it”.
So rather than miss a big rally and see my indicators align after the rally has ended, which will mean I could be missing out on a lucrative trade, I simultaneously place a buy and sell order in the same market at the same time for the exact same price.
I know this may sound like a counterproductive strategy at first but please bear with me and let me explain the method and strategy.
When I have placed the two opposing trades in the above scenario, I have achieved two things – 1. I have entered the market and 2. because the two opposing trades are placed at the same price and at the same time, I shall make the same amount of money as I lose so no matter what the market does, my profit and loss will accumulate to zero – until of course I close one trade and allow the other run (not taking into consideration the spread).
I enter the market this way because there was a danger of the market going either way during the course of the day, and doing so I have allowed myself to be in the market before the market makes its move and once the market has made its move and indicators have confirmed the same, I simply close the losing trade and allow my winning trade to rise higher and close at a much higher overall profit.
The reason why I ‘sometimes’ choose not to wait for the indicators to confirm before entering the market is because the initial rally (before the indicators have confirmed) is sometimes the biggest move and the rest (after the indicators have confirmed) are a much smaller number of pips in comparison and I would rather have small gains by capturing additional smaller number of pips by having entered the market earlier, than having to sweat it out by entering later and hoping my spread will be covered.
Furthermore, corrective use of stop loss and limit orders can also help tremendously in fast moving markets. Warning; your strategy has to be very accurate to work a technique like this and I always recommend testing any strategy before placing any money with it. I personally do not remember ever losing a trade using this strategy but then again I rarely use it.
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