Trade Example – AUD/USD

Filed under: Learn Forex Trading |

 

We currently have one live trade in play, on the GBP/JPY forex pair. This is currently going very well and is in profit by around 1.6% of our bank; with around 0.8% profit locked in with the trailing stop. Our final target is 2.5%, so we will continue to monitor how that goes.

 

In absence of any final result today, I will instead take you through a trade example so that you can understand what kind of trade setups that we are looking for with our live trades. This example comes on the AUD/USD forex currency pair, which is the pair for the Australian dollar and the United States dollar.

 

Figure 1.

If you look at Figure 1, you will see the 4-hour chart for this pair. What is immediately prominent when you look at this chart is that there are a lot of black candles, and most of them are in a row. It reminds me a little bit of an escalator at a shopping mall, and what we want to do as traders in this situation is to find a place to hop on and ride it some of the way down.

 

A good place to hop on to this trend is at the highlighted section on the chart. This is what we call an inside bar setup, and it signals that the market is just taking a little breather. This was a good place to put a short order in at the break of the low of the mother candle of this inside bar set up, with a stop loss placed just a few pips above the high of the mother candles, and a target of three times our risk. As you can see, this trade would have come off for a 3% rise on our bank.

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