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Forex broker strategy - Fixing losses
Basis of this broker strategy
is the following thesis: dealing center
doesn't use brokerage as the basic
technology, a basis of profit are the
client's losses. The client
transactions completed in current of one
day, as a rule, do not bring to dealing
center neither greater profits, nor heavy
losses. In a total sum these transactions
make small profit. The basic money appears
when positions open in current of several
bank days and lead the client to greater,
significant losses.
Acceptance of such thesis as an axiom
(statistically and empirically confirmed)
assumes next model of actions. It is not
done anything with client positions during
the moment of opening. Dealers simply
observe the change of client's profits and
losses. Dealers begin to undertake any
actions on overlapping client positions only
when sizes of current client losses reach
certain boundary values. For example, the
client position can be blocked when the
current loss on this position will reach,
for example 30 % of the client deposit (this
figure management of dealing center,
naturally, can vary in the any order,
proceeding from own reasons). Or the client
position can be blocked when the current
loss on it will reach such sizes, that
through a small number of pips (for example,
20-30 pips) this position will need to be
closed for restriction of possible
superlosses.
As it is possible to see, the technology
of overlappings described above aspires to
technology of "kitchen" and as a matter of
fact is kitchen, but with administratively
entered boundary conditions.
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