Live Trade Result – NZD/USD

Filed under: Live Trades |

I have just had a live trade on the NZD/USD pair come to fruition for a marginal 0.4% rise on the bank; and I would like to take you through my reasoning for taking this trade right now.

 

Figure 1.

If you look at Figure 1, you will see the daily chart for the NZD/USD pair. As you can see, recently, the pair has been quite bearish and has been moving down, with the 8-day exponential moving average crossed well below the 21-day exponential moving average. I have also marked in on the chart a significant area of support/resistance (marked with a horizontal green band). As you can see, price broke through this area and then formed a very nice bearish pin bar. It was at the close of this pin bar that I put an order in to go short at a 50% retracement of the pin bar – with a stop loss placed just a few pips above the high of the pin bar.

 

As for my target, I again split it and essentially put two short orders in. One of the order risked 0.7% of my bank with a risk-reward of 1:1 (and thus a target equal to that of my risk). The second order risked 0.3% of my bank (so a 1% risk in total), with a risk-reward of 1:2 (and thus a target that is two times that of my risk). As you can see, my first target was reached for a 0.7 % profit, and then my second target was almost reached, before pulling back and eventually gapping up and hitting my stop loss for a 0.3% loss. This gave me a cumulative profit of 0.4%. So on this occasion, the conservative approach paid off, as if we’d had a straight 1% risk for a 2% gain, we would have made a loss of 1% and our bank would have been 1.4% worse off.

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