Trade Example – AUD/JPY

Filed under: Learn Forex Trading |

 

I had a trade on the AUD/JPY pair yesterday (see: http://www.myfxbook.com/members/jjrgaskell/daily-trade/357261) that came out at breakeven. This could in fact have been a winner or a loser depending on how it was played, so in the end, breakeven was not a bad result. I will take you through the ins and outs of this trade right now…

 

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the AUD/JPY forex currency pair. What you can see is that the 8-day EMA is crossing above the 21-day EMA once again, meaning that the sentiment of the market is changing from bearish to bullish. Therefore, we would prefer to be on the side of the current momentum, and only take any possible long trades.

 

Figure 2.

Figure 2 shows the 4-hour chart for the same AUD/JPY pair. I have highlighted the candle that was of interest to us. This was a pin bar coming off of a daily support/resistance level. There were two ways in which this trade could have been played. The first would have been by placing an order at a 50% retracement of the pin bar. I did consider this, but as I had already missed the candle that followed the pin bar, I did not really anticipate a second retracement. Therefore, I entered at the break of the high of the pin bar, with a stop loss just a few pips below the low of the pin bar, and a target of two times my risk. When price when to one times my risk, I moved the stop to breakeven, and this was subsequently hit. However, I am now glad that I moved the stop to breakeven as otherwise; this trade would have been a loss. However, if I had entered at the 50% retracement area with a stop below the low of the pin bar and a target of two times the risk, then the trade would have been a success for a 2% rise on the bank. More tomorrow…

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