Important note in case of entering a trade and the direction reverses, follow the explanation
Since we have two opposing positions (buy and sell) on the same asset (TRADOORUSDT) and with the same leverage (10x), the best way to exit both without a significant gain or loss is by using the hedging strategy, and then closing both positions at the same time or when the net profit/loss reaches zero or close to it.
In the picture, we have this trade; we notice that the trader opened the first trade, which is a sell position on the currency at a price of 4.8 with a leverage of 10x and a virtual trade of 100.
But the market did not go as the trader expected; instead of the currency decreasing, it increased and continued to rise. With the increasing loss, the trader feared being liquidated, so he opened a position in the opposite direction with the same leverage and margin.
Here’s what the trader did
C. He has stabilized his losses, meaning that every loss from the sell position will be compensated by profit from the buy position.
Now the loss is confirmed, and the trader has time to think about what to do.
The trader's goal has become to exit without a loss, or just wants his capital back:
There are several solutions available to the trader; we mention them all.
Closing the profitable position (taking profit) 🛑
The upper position (buy) is currently profitable. You can close this position partially or entirely to take profits ($106.97).
The problem: If you close the winning position entirely, the loss of the bottom position (sell) amounting to $196.81 will remain open, and the net loss will be the old loss minus the profit you made.
B. Closing the losing position (stop loss) 📉
The bottom position (sell) is currently the loser. Closing it means realizing a loss of $196.81.
The problem: If you close the losing position, the old profits will remain open, but with any slight drop in price, the open position will start to lose, which may increase the overall loss if the market direction changes.
🎯 The best way: Closing both positions at the same time.
To break even, the fair (current) price must move to equal your net loss.
Waiting and monitoring the price: Since the sell position (entry at 4.8) is the biggest loser and the buy position (entry at 5.25) is the winner, this means that the price of TRADOORUSDT is currently high (5.8).
Executing the mass closure: If you want to exit with the least possible loss:
Wait until the current price (5.805) drops slightly.
When the difference between profits and losses decreases to zero or to a very acceptable loss value (for example, -$5 or -$10), use the "Close All Positions" option.
💡 Why should the price decrease?
A decrease in price will reduce the profit of the buy position (profits will decrease).
A decrease in price will reduce the loss of the sell position (losses will shrink).
When the remaining profit in the buy position balances with the remaining loss in the sell position, you can close to ensure the least possible loss, or try to break even.
