Welcome to my blog! Today I’m talking about a Forex trade that I made in the Euro-Japanese Yen pair. I paired these two together after doing my relative strength and weakness analysis this morning. And when I got to this chart, it looked like a great opportunity to make money. Read on to see how it played out.
When I got to this chart, price was in a clear up-trend. And at the time, was stalled at a resistance area that held up all month. On the hourly chart, I could argue both a high-base and a bull pullback. When I initially saw this, it was more in a pullback pattern, but by the time it triggered, it looked more like a base.
Entry
I zoomed out to the 4 hour chart to pick a target, and the next major key level I could see what a significant distance away. With an entry above the highs of the pullback and a stop at the lows, I had nearly a 4:1 R:R, so I set an entry order. It took about a half hour, but price pushed up and triggered me in to the trade.
The push up that triggered my entry was sizable, but there was a pretty quick pullback. Price pushed down a bit, under my entry, but stayed well above my stop. Eventually, price started pushing back up and put me in profit again.
Entry – 159.47
Stop – 159.06
Target – 161.034
R:R – 3.8:1
After eating lunch I had some errands to run, so I checked in on this trade. While price hadn’t hit 1R yet, I was significantly in profit. This brought me to a bit of a crossroads. I decided to lock in profits, so I moved my stop to break even, but I was trying to figure out whether or not to switch it to a trailing stop. On one hand, the trailing stop had the potential to lock in more profits, but on the other hand, my initial risk level was 41 pips away, and at the time the break even level was only 25 pips away.
Exit
Ultimately, I decided to just leave it as a regular stop and check in on it later. Unfortunately, though, my errands took longer than expected; and by the time I got back to the charts, price had pulled back and stopped me out exactly at my entry for a break-even trade.
In Hindsight, had I been actively managing the trade, I probably would’ve moved my stop up with the SAR and been able to lock in a little bit of profit. Using a trailing stop probably would’ve resulted in a bit of a profit as well.
Thinking about the circumstances now, the SAR would’ve probably been fewer than my initial risk level as well, but I would’ve moved my stop there. So why the hesitation with the trailing stop? I guess I was afraid of price only pulling back enough to stop me out and then making a strong run.
I should have use a trailing stop, though, the more I think about it. The goal is to lock in profits as price moves in my direction, and more often than not, when price reverses that much, the run is over. I also, like with using a take profit order, can adjust my strategy if I find that I’m leaving money on the table. So far, though, using a trailing stop has been the more profitable option.
Thanks for reading! What do you think about this trade? Would you have managed it differently? Let me know in the comments. Or if you did catch some pips today, let me know where. And stay tuned for more market analysis and Forex trades.