​Five Practical Tips to Get Rid of Forced Liquidation

WikiFX Strategies (3 Feb.) - Many beginners in futures trading often get chagrined by forced liquidation. Here are some practical tips to help you get rid of it.

1. Use moving averages (MAs) to identify dynamic support levels

Prices with sharp upsides are less likely to fall back to their previous resistance-support turning point. Traders can use MA to identify the dynamic support level, i.e., the trading opportunity.

2. Use MAs to identify trends

Uptrend comes when the 50 MA crosses above its 100 MA, while the downtrend appears when the 50 MA crosses below its 100 MA.

3. Use stochastic oscillator to identify opportunities

Don‘t go short when reading an overbought on the indicator that occurs during an uptrend, and don’t go long when reading an oversold on the indicator that occurs during a downtrend.

4. Use the average true range (ATR) to identify stop-loss level

The ATR is a market volatility indicator. A higher ATR value means more uncertainties in the trend. Traders can use the ATR to place stop-loss and take-profit orders.

5. The most important thing in trading

The most important thing is not the number of profitable trades, but (1) the win rate (2) the average size of the profit (3) the loss rate (4) the average size of the losses. They allow you to calculate your expectations.

Expectation = (win rate x average profit) - (loss rate x average loss) - (commission + slippage)

A negative expectation indicates losses in the long term.

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