What does it mean to add and cover positions in the currency circle?

Adding positions in the currency circle refers to buying more currencies to increase holdings based on the original position. Covering a position means buying more currencies to reduce costs when currency prices fall. The purpose of adding a position is to be optimistic about the market outlook to increase returns, reduce costs, and spread risks; the purpose of adding a position is to hunt for dips, dilute costs, and avoid liquidation. What needs to be noted is: careful evaluation, position control, stop-profit and stop-loss settings, and dynamic position management.

The meaning of adding and covering a position in the currency circle

• Add a position: Buy the same currency again based on the original position to increase your holdings.
• Cover-up: When the price of the currency you hold drops sharply, in order to reduce the cost price, buy more currencies.

Purpose of adding positions

• Be optimistic about the market outlook: Believe that the currency price will continue to rise, and increase profits by adding positions.
• Reduce the cost price: If the price of the previously purchased currency rises, you can increase the average purchase price and reduce the cost price by adding positions.
• Spread the risk: Avoid investing too much money in a single currency and diversify the risk by adding positions in different currencies.

The purpose of covering positions

• Buying dips: When the price of a currency drops sharply, use covering positions to reduce holding costs and make profits when the currency price rebounds.
• Dilute costs: Reduce the average purchase price by covering positions, thereby diluting the overall cost.
• Avoid liquidation: When the currency price drops sharply and the account loses too much, increase the margin by covering the position to avoid liquidation.

Notes on adding and covering positions

• Prudent evaluation: Before adding or covering a position, fully evaluate the currency price trend and market risks.
• Control your position: Don’t add or cover too many positions to avoid taking excessive risks.
• Take profit and stop loss: Set reasonable stop profit and stop loss points to protect your own profits and avoid excessive losses.
• Position management: Adjust positions dynamically according to market conditions, close or add positions in a timely manner, and optimize asset allocation.

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