Immunization open position

Even such a simple method of immunization is so significantly reduces the risk of transactions on the FOREX, it is difficult to give a trader from trading on the two sub-accounts. Indeed, a detailed study of options trading in one currency in opposite directions on two accounts made an overall positive result. It is achieved by the choice of the optimal trading strategy, which is based on a number of rules, and postulates that require strict compliance.

To better understand what is at stake, consider a simple example. The figure shows two graphs USD / JPY - day and 60-minutes from the moving average curves with periods of 21 (blue) and 5 (red) and well-known Sstoch oscillators and MACD.

On the day we see unfolding a strong rally the U.S. dollar against the Japanese yen. As of 12/13/01 000 Stochastic Oscillator is in a zone of extreme overbought, but MACD is still signal a good potential bulls. Both curves moving averages - mA (21) and mA (5) - upwards, confirming a bullish trend. However, their large distance from each other may indicate the imminent start of the corrective move down the course studied currency.

Applied in a mechanical trading system [2] builds green bar - a strong bullish signal. Based on the analysis of the daily USD / JPY, we conclude that the trend - bullish, but the market is overbought.

On the chart USD / JPY 60 minutes as of 12/13/01 000 is also dominated by bullish sentiment both curves, mA (21) and mA (5), point up. Stochastic hours earlier gave a buy signal, but the MACD is not informative in this case, as a mechanical trading system builds neutral bar - and only after an hour it will also send a signal to buy (blue bar is formed, and after - green).

As a consequence, the first sub-account can open a position on the trend. As a result, we bought 1 million USD / JPY rate at 126.20. Subsequently to immunize an open position to the second sub-account to sell 1 million USD / JPY at the time when this will be a good reason. Here I would like to draw attention to important tactical point. If on the second sub-account adhere to the principle "follow the trend» (trend following), then it would be easier on the first bill to close a position, than to leave it against the trend, and the second account does not touch it.

The idea here is that for the purposes of immunization open position on the opposite trend is only suitable strategy, the so-called "reversal pattern» (reversal pattern), in which the smaller sweeps sought reversal signals, and only if available (at least two indications ) opens the second position against the current trend. In this sense the earliest possible diagnosis of the emerging trend and open a position is on this new trend.

Price tries to break the upper limit

So, back to the left side of the figure. For the next four hours trying to break the upper price limit of the corridor at 126.50, which was built used a mechanical system. As you can see - without success. Thus formed pyatibarnaya reversal pattern (so-called U-turn on a fractal B. Williams). It actively supports the Stochastic Oscillator crossed his curve SSK SSD curve downward from the zone of moderate overbought and moving rapidly downward. The MACD Histogram more cautious still above the level of its moving average, thus signaling a still good potential bulls. Curves mA (21) and mA (5) in this case is not informative.