Trade Example – AUD/USD

Filed under: Learn Forex Trading |

I have a trade example for you today on the AUD/USD forex currency pair, and this is a trade that I took on Forex Tester (www.forextester.com), which as I have mentioned before, is a great tool for practicing your forex trading in a real trading environment.

 

Figure 1.

Figure 1.

To begin with for this example, take a look at Figure 1. This is the daily chart for the AUD/USD pair (the pair for the Australian dollar and the United States dollar), and this is a timeframe that I prefer for trading off, as it is much more reliable than the other timeframes (particularly the lower timeframes). What you can see is that the pair had been in a powerful downtrend, with the 8-day exponential moving average crossed below the 21-day exponential moving average, and the chart visibly moving down from left to right. The pair formed a bottom of sorts as the trend took a breather, and this created a level of support/resistance, that I have drawn in on the chart with a red horizontal line. Price then passed through this level and retraced back up to it, forming a bearish pin bar (highlighted in green). It was here 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, and no target set at all – intending to manage the trade.

 

As you can see, the order was filled, and price continued to move down. However, my only mistake with this trade was exiting a little too early. As you can see, I exited after there was a bit of a tail on one of the black candles – for a very nice and tempting profit of around 4.5% of the bank (with a 1% risk). However, by moving the stop loss, I could have quite easily squeezed a little bit more out of this.

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