The Daily Trade – Day 8 (the result)

Filed under: Learn Forex Trading |

On Friday in the “Daily Trade”, I talked about a trade setup that I had taken on the GBP/JPY pair. Just to recap, there was a nice bearish engulfing pattern at my support “zone”, followed by a small consolidation candle which made an inside bar pattern, so I made an order to enter on the short side once the mother candle had been breached.

The trade was entered on the next candle on the one hour chart. Price consolidated for a few hours, followed by another stab at the support zone with a big pin bar. Luckily, this did not penetrate our stop loss just above the high of the move. After this pin bar, price moved down rather well and quite quickly.

Figure 1.

As I mentioned previously when I talked about this setup, my plan was to move to breakeven once the trade reached two times my risk. So that is exactly what I did – allowing us to be in a risk free trade. Unfortunately though at that point, price reversed and moved decisively to the upside (see Figure 1.). Although it seemed like price was not quite hitting our new breakeven stop loss, the spread must have temporarily widened and we did indeed get stopped out at breakeven. I have since sent a letter to my broker to ask them to explain why my stop was hit when it seemed like price had not yet reached that level – even considering the spread. But I’m guessing that the spread simply went a little wider at the end of Friday. I will update you next time if there is any other explanation.

In conclusion, the result of this trade was a little unfortunate, as price did move in the direction that we anticipated and we did reach two times our risk. However, breakeven is never a bad result – and we have successfully protected our capital for the next trade setup that we find.

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