What is Guerrilla trading?

  • Dec 09 2021
  • by
  • Analyst AZA
What is Guerrilla trading?

What is Guerrilla trading?

Several techniques can be used to make dollars in the Forex market, one of which is guerrilla trading techniques. The word guerrilla itself is often associated with combat tactics that are not formally related (usually covertly) to the conditions of war. The number of soldiers involved in guerrilla warfare is usually small, but everyone is trained to fight quickly, focused, and effectively. According to Investopedia, guerrilla trading is a technique to get in and out of the Forex market very quickly for short profits while minimizing risk. In other words, this guerrilla trading technique uses a very short time, even shorter than the scalpel. Usually, a trader uses this technique to trade in a Forex trading session. This is not a problem as they rarely hold a position for a few minutes.

The guerrilla business style looks interesting but is very dangerous. Hence, beginners are usually not recommended to use guerrilla trading techniques. On the other hand, several factors influence the success of this guerrilla business, including low wages, high leverage, and, last but not least, spreads. This makes the guerrilla trade very suitable for use in the most liquid pairs as the spreads are the lowest.

Features of a gang smuggling

As explained above, the guerrilla trading method consists in making small profits for every free trade. To maximize profits and reduce risk, guerrilla traders open multiple positions at the same time in one trading session. So the goal is to open many trades at once and then close them quickly. Following this pattern, several characteristics of the guerrilla trade can be found, including:

  1. The longer you hold this position, the higher the risk

Losses can occur due to many factors, including holding the position for an extended period or not closing the position immediately if profit is variable. Guerrilla traders anticipate this by holding positions for more than a few minutes. This is because the risk is higher if you have used guerrilla trading techniques before and the time you spend in a trading session is very long.

  1. Just a few advantages and disadvantages

The guerrilla trader is usually satisfied with a profit of 10-20 pips per trade. Contrasted with the scalpel, which may be looking for a dual range that is in the 25 to 50 pips range. Therefore, the loss target is determined by the profit target, which is in the amount of 10 to 20 points or can be in his name.

  1. Several centers to be opened before the press release is published

Before the press release, the market is usually very volatile. This is often the case when major economic data is released, such as B. Non-farm wages, interest rates, consumer price indices, etc. This opportunity is used by guerrilla traders to make quick profits. They will open around 20-25 positions until conditions are favorable.

  1. According to the technical analysis

Because the focus on trading is so short-lived, guerrilla traders often rely on technical analysis to determine the best time to enter the market. You are usually able to predict the movement of a 1-minute price chart using various indicators such as a moving average to identify a trend or an oscillator to identify an oversupply.

  1. Prioritize low spreads or commissions

Since they have to get out of the market, the guerrilla trading style puts a lot of emphasis on commissions and low spreads on transactions. Numerous factors, including currency pairs and broker choice, influence this. These traders usually trade in major pairs such as EUR / USD, GBP / USD, AUD / USD, USD / JPY, and USD / CHF. Why? Because the pair guarantees liquidity and has a low spread. The selected broker must also be correct. Guerrilla traders prefer brokers with low spread (down to zero spread) and small commissions to facilitate their guerrilla trading practices.

  1. Not recommended for beginners

The ability to become a successful guerrilla salesman is not instant. It takes tough fighting and long hours of flight to build your intuition for guerrilla trading. With enough experience, this type of trader can deal with several bad situations that arise when the price is out of plan. This technique is not recommended for beginners as the risks are very high. Especially when prices suddenly fluctuate (at high or low speeds) while beginners are still wondering what to do? In such an empty situation, the risk of losing capital is greater.

  1. When the market is so intense, expect the right choice

Under certain conditions, the price will fluctuate a lot, so it is very difficult to predict the correct entry point. The guerrilla trade-off technique takes into account the possible risks that may arise. If the market conditions fluctuate significantly, the risk of loss also increases. So waiting and watching can be a good solution. These types of traders start to work when the market calms down and price movements are easier to spot.

An example of guerrilla trading

How is gang trading carried out? Here is the simulation:

The guerrilla dealer has $ 5,000 in balance in a zero spread account. He opens 10 positions per lot in the EUR / USD pair with the following specific conditions:

Value per point: $ 10

Play: 0 pips per input

Commission: $ 25 per 10 lots (trade size 1,000,000)

Earn: 10 points

Stop loss: 5 pips

After a few moments, the results were clear. 7 wins and 3 losses were made from 10 trades. Then his total net profit is as follows:

Profitable trading: 7 x (10 pips x $ 10) = $ 700

Losing trade: 3 x (5 pips x $ 10) = $ 150

Gross Profit (Gross Profit) = $ 700 - $ 150 = $ 550

Trading Commission = $ 25


Net Income = Gross Income - Trading Commission = $ 550-25 = $ 525.

From the guerrilla trading example above, you can see how strictly money management should be applied. Remember to always be disciplined with your stop loss. Why? Imagine if the win rate goes from 70% to 60%, the net profit goes down to $ 375.

Requirements to become a guerrilla dealer

Anyone can become a guerrilla broker. But remember, no matter whichever you choose, whether a scalpel, a singer, or a guerrilla businessman, they are not all safe. To be successful in the guerrilla business, you must have the following qualities:

  1. Decisions can be made quickly and accurately

The most important thing a guerrilla businessman should have is being able to make quick and accurate decisions in a short period. It sounds difficult, but it is what needs to be done. The forex market changes frequently, especially at shorter intervals, so traders need to be able to adapt quickly.

  1. Trading is possible without emotions

What happened. Leave the past to the past. A successful guerrilla businessman must enter the market without emotion. Therefore, if the open position turns into a major loss, you shouldn't regret your decision too much. On the other hand, they should be able to do without greed and greed if they make a high profit, which can lead to exaggerations in the transaction.

  1. Always prioritize money management

Every guerrilla businessman needs to know exactly how much his money is worth. Even money management accounts must be registered in a trading journal and strictly enforced upon entering the Forex market. It is important to trade a few lots when opening a position and to have a clear idea of ​​the total losses and total profits from exiting the market at high speed.

  1. Legitimate trading experience

Mastering guerrilla trading techniques years of experience. You have to go through several difficult situations and high pressures when entering the Forex market. From unsuccessful wins, margin calls, false open situations, and so on. Sometimes confidence in the lucrative opportunities awaiting us can instantly disappear when the market moves in the opposite direction. With the experience of a skilled trader, this type of trader is flexible and has a strong attitude to face the difficulties of competition in the Forex market.

Guerrilla Trade Tips

In order not to fall into a crocodile tuck (or suffer heavy losses), there are a few things you need to be prepared for when guerrilla trading, including:

  1. The key to stopping losses

Transaction discipline needs to be properly applied, especially when setting a loss limit. Why? Because the speed of guerrilla trading can confuse traders to manually review floating positions. Therefore, an automatically-activated SL is necessary to limit losses. It also ensures that all open positions have an acceptable level of risk within the risk tolerance range.

  1. The following trading trends:

The trading trend is the best strategy for a guerrilla trader. If you are a news trader, check out the latest business news on the Forex calendar. For example, positive economic data was recently announced in the US. Usually, US dollars are bought instantly while discounts are sold, whether in EUR, GBP, AUD, or NZD. This type of data dissemination is usually a sign of the emergence of a new trend, according to which the input positions need to be opened.

If you are a technician, you can use the moving average indicator to spot trend changes and confirm the price movement. Trend changes become noticeable when the price moves along the moving average line and closes below or above it. If a geranium shape forms after this, it is confirmed that this indicates the continuation or return of the price.

  1. Use of averaging techniques in certain situations

The damage that occurs can be reduced in several ways, including the rate reduction method. Below you can see the implementation of the average reduction strategy. The first position opens with a purchased item, for example. It turns out that the price has fallen and minus the float has occurred. Here the bearish average technique can be used to prevent the floating component from increasing, ie by reopening the buy position in a certain price range. It is to be hoped that with the opening of the second buy position, the price will rise and compensate for the loss of the main position.

Perform this averaging technique with careful analysis and always confirm the direction of price movement with a momentum or trend indicator.

Guerrilla trading isn't as easy as it sounds. If you already have a lot of flying hours and enough capital, you can use this technique. For beginners who want to try this technique, it is recommended to do the scalp first. The practice of scalping helps traders determine the right time to get in and out. When it comes to guerrilla warfare, you should always make money management a priority.

According to Investopedia, guerrilla trading is a technique to get in and out of the Forex market very quickly for short profits while minimizing risk.


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