Trading tactics are required to minimize risks of operations conducted. There are standard situations, showing the best possible ways of further development. Trading tactics allow not only minimizing risks, but maximizing profit as well. Sometimes a situation develops so that some additional funds are required to escape from them, that is why you should not open positions in the amount of 100 % of margin deposit.

You should always know in advance:

• entering point;


• leaving point;


• time of being in the market;


• potential profit/ risk ratio.

While compiling trading plans, please, observe the following rules:

• rule of position opening – at least two signals, Fig.1;


• definition of the size of the position opened (number of lots);


• time of the position keeping;


• definition of possible profits and losses, as well as their ratio

Fig. 1. When a support is touched for the first time, it is the first signal, then the figure of Triple Bottom is formed, and by the end of the third minimum, convergence with the price is formed in MACD, it means that we can see a signal with triple force: support, “Triple Bottom”, convergence with price in the oscillator.

Rules of position closing:

• when estimate profit is gained;


• when estimate loss is born;


• when estimate time is elapsed;


• when maximum profit is reached;


• when some signals about the trend change are received.

Trading tactics can be classified as follows:

1. Following a trend. Trend Market – the market is moving upwards or downwards, i.e. the rates rise or fall. A trader establishes the trend of the market movement and works in the trend direction. It is silly to open a selling position with the trend demonstrating the price increase.

2. Working in a corridor. Range Market – market with a limited magnitude – a currency rate is within a channel of 20-30 points. The limited magnitude may be 50 or even 100 points or higher, it is individual for every situation. Time is also an essential factor, for example, if the price changes by 50 points or more within several minutes, such a situation can be hardly called Range Market.

3. Based on breakthrough. Reversal Position

1. Following a trend. Trend Market

Let us discuss an example with the ascending trend. Using the postulate that “trend is our friend”, let us search for opportunities to buy.

When a resistance level is broken. We will take the day closing price as a guiding point. If the closing price (the candle body) is left higher than the level, we will open a buying position. This kind of filter helps avoid buying at accidental interday movement of the price. We will protect a bargain with a stop order. It can be placed directly under the breakthrough level, which has turned into a support level.

From a support, or when a pullback happened after a breakthrough. Actually, we wait for the movement back to a support, which a resistance turns into after it has been broken. The back-movement was discussed during the last lections. When a pullback happens, it is possible to use Fibonacci levels of 38.2%, 50%, 61.8%

From the trend line. If ascending minimums can be connected with a support line, when regular movement to the trend line occurs, most traders are convinced that the price will rise from this trend line. Human psychology works so: a person thinks that if the price has bounced for four times, it must bounce for the fifth time as well. Sometimes it is impossible to connect the ascending minimums with a line. In this case, it is possible just not to apply it. In addition, moving averages can be used a trend line (we will discuss them in detail during our next lectures).

By signals of indicators. The next lectures are dedicated to trading computer systems for work with a trend.

Averaging. Averaging is such a strategy of work, when you concluded a bargain according to a trend, and the price went against you, and you make a similar type operation with more profitable price. The main setback of averaging is the fact that you cannot know in advance, till what price the market will move against you, at the same time averaging requires doubling the previous deposit sum. Therefore some sufficient deposit is required for this strategy. Mind that averaging against a trend is a good method of losing your money. For a new, more profitable entering point, take the next support level or overselling area, convergence with the price on oscillators as a guiding point.

Addition. Addition consists in incrementing positions in a trend direction. Leaving the previous buys in the market, we open a new position when the next trend signals occur. For example, we have a buying position opened. The price comes to the resistance level, we move Stop for case of correction. If the price breaks the level, the old position remains, and another buying bargain is concluded. Thus, having caught a good trend, we can maximize out profit.

When working in a trend direction, target may be placed either on the channel line or at the next important resistance or support level. Another way is to wait for signals about the trend reversal—by indicator, reversal models. In addition, it is possible to move Stops following the movement. Mind the time: if the price makes no headway for a long time, a quire reasonable conclusion suggests itself that the market is in irresolution. It is possible to consider fixing the profit or protecting your bargain by moving Stop.

2. For work within a corridow. Range Market

Our challenge is to define the corridor limits. First let us mark support and resistance levels in day graphs, then add interday levels in hour scales. In addition, let us mark “round” numbers as psychological barriers.

It is advisable to put the position opening and to fix the profit on the price cluster, and non on the shadow - Fig. 2. Transfer risk behind the price cluster and mind the spread. Trading in a corridor is convenient with clear target—the corridor limit, and clear price for S/L placing (behind a support/ resistance level).      

  Fig. 2. Note, if you place orders very close to the levels, the price will simply fail to reach them.

3. Based on a breakthrough. Reversal Position

In addition to work in a trend, it is advisable to use the tactic for work in a corridor as well. Sooner or later, the price will jump out of any corridor. We can just suppose the future breakthrough direction, but it is always possible to get prepared for any variant of the situation development. In the first case, we place a position opening above/ below a level. In the second case, we take the day closing price as a guiding point. It is required to apply this time filter in order to avoid false interday movements. We remember that profit must always exceed loss in a trading plan. Even if we have born some loss by one bargain, and gained some profit by the second bargain, we have positive balance all the same.

Target must be defined in two ways:

• Measure the channel width and set the width distance from the breaking point – Fig.3.             


• Work with the previous resistance and support levels.

Πθρ. 3.

In conclusion of our lesson, it is worth saying that successful application of trading tactics enables us to work in the financial market with professional approach, to maximize profit and reduce losses. A situation, when we do not quite understand what is happening, still can occur. In this case, the following option is possible: refrain from a bargain and wait till the situation becomes clearer. A private trader` s advantage consists in opportunity to chose the working time himself. If there emerges a standard situation in the market, when it is quite clear what tactic to apply, this is the very time to open positions and make money.

Alex Sabodin. Pro Finance Group Inc.