Sometimes there are situations when you have opened a position on Forex and have a certain profit on it, but you feel that the price is about to reverse, and you have a keen desire to close the current position. How to deal with this feeling of fear and how to find the fine line between greed and fear of losing profits? Positive locking will help you with this, that is, instead of closing the position, at the very beginning of the correction, you open an opposite order, thereby freezing the profit, and then at the point where the correction ends, you close the locking order, receiving additional profit on the rollback, and continue to receive profit by trend. If all this seems too complicated to you, then read below, and everything will immediately become clear. You will also learn where you can effectively use a positive lock, and why it is better than usualstop losses . Do not forget to look at the rating of Forex brokers , which presents the most relevant brokerage companies at the moment.
What is locking?
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We will not now dwell on what locking is. For those who come across this concept for the first time, we advise you to read about it here… In a nutshell, we can say that position locking is an analogue of stop losses, only when the latter are triggered, losses are recorded, and in the case of locking, profit or loss is frozen. Accordingly, there are negative and positive locking. A negative lock can only be used by professionals, since the way out of locking positions is quite difficult, and if it is used ineptly, then you can quickly say goodbye to your deposit. But a positive lock is an excellent tool for beginners, as it allows you to get rid of the feeling of fear that prevents you from focusing on trading and leads to unwanted losses.
In what cases can positive locking be applied?
1. The most common situation is when you open a trade with a trend , but a reversal pattern appears, and in theory, you should close the position, but instead you open another trade with the same volume, but against the trend, thereby applying a positive locking. Now, no matter in which direction the price moves further, the profit will remain unchanged. Before opening a lock, you need to make sure that the correction is over, in this case the countertrend trade is closed and the first trade is left open. As a result, you made a profit on two trades. If you did not use the locking system, then it would be too dangerous to open a trade against the trend.
2. Let’s now consider a situation when the market was not a correction, but a trend change. In this case, we would close the first trade, even with a small loss, and we would leave the second trade. Please note that thanks to the locking system, we are constantly in the market, canceling one or the other order depending on the situation. If we used regular stop losses, they could have been knocked out of the market several times. For us, locking acts as a “pause” in Forex. If you see some kind of “sawtooth” movement in the market, or important news is expected to come out, and you have an open trade, then lock it until normal movement resumes.
3. Besides, positive locking is a psychological factor. Having locked up profits, you can take another look at the market with a sober eye, evaluate all the pros and cons before making a final decision. Also, you are almost always in the market, as a result, you get more profit. This is also a very important psychological moment. The only drawback of positive locking on Forex is the double spread payment . Otherwise, it is a necessary and useful tool.
Locking in MT5 terminal is now possible!
Broker Alparioffers its clients to use the updated version of the MT5 trading terminal with the locking function. Thousands of traders have been waiting for this event since the launch of MT5. The updated version of the terminal will be available to holders of ecn.mt5 accounts. It is possible that in the future an updated version of the MT5 trading terminal with a locking function will be provided by other brokers.
