Live Trade 114 – Analysis and Result

Filed under: Learn Forex Trading |

Our live trade number 114 got its trailing stop hit this morning, so I would like to take you through the setup and result.

 

The trade in question came of the GBP/CAD forex currency pair, which is the pair for the Great British pound and the Canadian dollar. If you look at Figure 1, you will see the daily chart for this pair.

 

Figure 1.

I have highlighted the candle that we are most interested in. This is a very nicely defined pin bar at a good area of previous support/resistance.  It was also in the direction of the dominant trend, which was bullish. We know the pair is bullish due to two reasons: 1) the chart is visibly moving up from left to right, and 2) The 8-day exponential moving average is crossed above the 21-day exponential moving average, and it has been for some time.

 

I put an order in at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the move, and a target of two times our risk. I also set a trailing stop equal to that of our risk (i.e. the same number of pips as our stop loss).

 

Unfortunately, our trailing stop was hit for a slight profit. That gets us up to a 3.5% profit for the month of May. Had we not been using the trailing stops, our profit would be 8%. This gives us a curious dilemma. Should we continue using trailing stop for small and steady profits, or should we remove the trailing stops, but have bigger profits, but also bigger draw-downs? If we had not been using trailing tops, our bank would now be in profit. Therefore, I may start to record both scenarios.

 

RESULTS

 

Trade 114 = +36.76

 

Bank = 9,601 GBP (-3.99%)

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