Why do we open a buy trade? Why do we open a sell trade? Why do we close a buy trade? Why do we close a sell trade? Why do we hedge? Why do we take a loss?
Trading is a process of collecting information, making descision, and collecting information and making descision,... in order to have the equity grows.
What kind of descision we can take? Many, but we can classify them into only severall types:
1/ Exposre>=0, increase it: Buy certain unit;
2/ Exposure>=0, reduce it: Close certain Buy trades, or Sell certain units that is smaller than current Exposure;
3/ Exposure<=0, increase it: Sell certain units;
4/ Exposure<=0, reduce it: Close certain Sell trades, or Buy certain units that is smaller than current absolute value of Exposure;
5/ Add fund;
6/ Withdraw fund.
There should be 2 separate things to be considered in making descision: the Market and the Account Status.
Collecting Market's information, analyzing it and predict the price move is done by Signal Generator.
1/ When the Signal Generator "think" that price is going up--> Signal = "Buy";
2/ When the Signal Generator "think" that price is going down--> Signal = "Sell";
Collecting Account's information, analyzing it to allow/disallow using more margin or to require reducing margin is done by Account Status module.
1/ If Pip Value is too high and/or PTMC (pip to margin call) is too small then no more margin is allow or even margin has to reduce.
2/ 1/ If Pip Value is still within limit and PTMC is still larger than limit then more margin is allow to be used.