With five mini lots to trade, enter incrementally higher amounts once entry price is reached. Remember you have a bearish view of GBP/USD pair. Suppose you decide to go short at 1.3520. By making multiple entries you are getting your feet wet, making sure you have an interest in the market.
Don’t worry, you have started small. You have lowered your risk level. 1 pips loss is equal to only $1. Now two things can happen. The first thing most likely to happen is the price shooting up as you enter a short position. Many traders have seen this happen most of the time.
In case the price further plummets this is what you had anticipated. Not a bad place to be. Starting small means making a win-win position! Suppose the GBP/USD pair moves up not down. Suppose the cable move higher to 1.3535. You short two more mini lots. You are getting a better price.
If the cable continues to climb up, we still have 2 more lots to better our cost. Suppose the cable moves more up and it is sitting at 1.3545, 25 pips above our entry point. You can choose to exit your positions with a meager loss if you feel uncomfortable with the trade. In this case just $25+$10+$10=$45.
You should have lost 25 pips or $250 by now using a one lot strategy. With one lot, you must have been definitely stopped out by now. The GBP/USD pair finally begins to come off and gains downside momentum. You short the final two mini lots at 1.3523.
This is how to build a position. You were able to get a better cost for shorting five mini lots (36 compared to initial 20) and you were able to ride the price action higher that might have stopped out most of your fellow traders.
In this case you had set the stop loss as 40 pips for each mini lot. None of the stop losses were triggered. The price went up by 25 pips before reversing and going down the way you wanted the market to move. Once the topside stops are taken out, the trade has room to move onto the lower side. Exit according to your support level taking out 2/3 and leaving the rest with a stop at entry looking for lower levels.
Big traders make entry and exit decisions according to price action. Big traders rarely trade with fixed order in the market for the fear of revealing their intentions. This type of trading is best suited for experienced traders.
Building a position means establishing ranges for you to trade off of instead of defining absolute values for a perfect entry. New traders are better off trading with multiple fixed orders in the market which lets them focus on tweaking their analysis more.
There is so much intra-day noise that trying to find the perfect entry and exit of any trade is practically impossible in the forex market. You should think what is a good 10-15 pip range to enter/exit my position instead of thinking at what price I should make an entry?
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