The strategy that opens two opposite positions on the same currency is called the 'opposite strategy' or 'hedging strategy'. In this strategy, the trader opens a buy position and a sell position on the same currency at the same time, aiming to profit by managing risks and making gains from price movements.
How to Profit from the Opposite Strategy
1. *Market Analysis:* The trader must analyze the market and identify trends and patterns that may indicate price movements.
2. *Opening Positions:* The trader opens a buy position and a sell position on the same currency at the same time.
3. *Managing Positions:* The trader manages positions by closing the losing position when it reaches a certain level of loss, while keeping the winning position open to achieve more profits.
Example of the Opposite Strategy
Suppose the trader wants to apply the opposite strategy on the EUR/USD currency pair. The trader opens a buy position and a sell position on this pair at the same time.
Profit Scenarios
1. *If the price rises:* In this case, the buy position will be profitable, while the sell position will incur a loss. The trader can close the losing sell position and set a stop-loss level, leaving the winning buy position open to achieve more profits.
2. *If the price drops:* In this case, the sell position will be profitable, while the buy position will incur a loss. The trader can close the losing buy position and set a stop-loss level, leaving the winning sell position open to achieve more profits.
Risks of the Opposite Strategy
1. *Increased Costs:* Costs can increase due to opening two opposite positions at the same time.
2. *Difficulty in Managing Positions:* Managing opposite positions can be challenging, especially if the trader does not have enough experience in risk management.
Conclusion
The opposite strategy is a trading strategy that relies on opening two opposite positions on the same currency at the same time. This strategy can be profitable if applied correctly, but it requires careful market analysis and good risk management.