Baodi Finance and Economics: the Strategy of improving Application and replenishing positions in Foreign Exchange speculation

Short covering refers to foreign exchange investors holding a certain number of securities on the basis of buying the same securities. Covering is a passive strain strategy after being trapped. It is not a good way to untie it in itself, but it is the most appropriate method in certain circumstances. There is no best way to buy and sell Forex, only the most suitable way. As long as it is used properly, it will be a sharp weapon to turn defeat into victory; but if it is not used properly, it will also become a hotbed of self-restraint. So let's take a look at what skills there are when applying the cover operation.

I. The market is unstable and does not cover the position. When the foreign exchange market is in a falling channel or relay rebound, you can't cover your position, because when the US index falls further, it will drag most currencies down together, except for a few currencies that strengthen against the market. The best time to cover a short position is when the index is relatively low or has just reversed upward. At this time, the potential to rise is huge, the possibility of falling is minimal, and it is safer to cover positions.

Second, weak currency is not supplemented. Weak currencies mainly refer to those currencies that do not rise when the market rises and fall when the market falls. The purpose of covering positions is to make up for the losses of foreign exchange covered in front of them with the profits of the currency covered later. Since this is not necessary, we must make up for the original varieties of foreign exchange covered. For short positions, it is not the key to make up what varieties, the key is to make up the varieties to achieve the maximum profit, this is the focus of investors to consider. Therefore, it is necessary to make up for those strong currencies, not weak currencies.

Third, the currency that has soared will not be replenished. For a currency that has soared, once it is covered, it is best not to cover the position. Foreign exchange investors spread out this kind of currency, will only make up more and more sets, the deeper the set, will eventually fall into the mire.

Fourth, we should grasp the timing of covering positions. Try to succeed once. Never make up positions by stages or by stages. First of all, ordinary investors have limited funds and cannot afford multiple leveling operations. Second, covering a short position is a compensation for a previous wrong purchase, and it should not be a second wrong transaction.

The content of this article was compiled by Bao Kun Finance: www.bkcj168.com.