This page is just beginning to talk about breaks and bounces and I am not sure what these two sentences mean.
Remember, whenever you close out a position, you take the opposite side of the trade.
Closing your EUR/USD long trade at or near breakeven means you will have to short the EUR/USD by the same amount.
Is it saying that I have two perform two trades to hedge my trade?
Yes, that’s what I understand from the screenshot but this can lead to revenge trading. Check out my live video recoding to learn more about price action. I hope you like the videos
A breakout happens when price goes out of an area of limitation while bounces means price got to its area of limitation but couldn’t break through then continues its previous movement.
PS: Limitations could be trendlines, support and resistance, cups & handles, heads & shoulders to mention few.
On hedging, i don’t know how best i would answer that. leaving that to the professionals here.
No. Its not hedging. Its a simple everyday transaction.
Let me try to simplify it with an example.
Lets replace EURUSD with an orange.
Suppose you have some cash in your pocket and see a fresh and appetizing orange in the fruit market and decide to buy it. This means that instead of money in your packet, you now have an orange. For whatever reason you feel that you were better off with your cash than the orange. Now for you to turn that orange into cash, you have to sell it.
Back to trading
You have money in your trading account and you see a “tick all boxes” set up and decide to buy 1 lot of EURUSD (orange). This means that instead off cash, you have 1lot of EURUSD (orange). For whatever reason you feel you are better in cash than that 1 Lot of EURUSD (orange). For you to get back to cash, You need to sell the EURUSD. (close the trade).
I hope it makes sense…
This makes more sense.
Thank you!