Trade Example – AUD/USD

Filed under: Learn Forex Trading |

We had a losing trade on the AUD/USD forex currency pair today, to give us a pretty poor start to August, as we are currently 2.5% down. However, regardless of the outcome, I would like to run you through this trade right now.

Figure 1.

 

If you begin by looking at Figure 1, you will see the daily chart for the AUD/USD pair, which is the pair for the Australian dollar and the United States dollar. As you can see, the chart clearly moves up from left to right, and the 8-day exponential moving average is crossed firmly above the 21-day exponential moving average. All of this tells us that the pair is in a strong bull trend, and as such, we are better off looking out for price action signals that confirm this bullish momentum.

 

Figure 2.

Figure 2 shows the 4-hour chart for the same AUD/USD pair. There were a couple of nice pin bars, which also happened to be inside bars (highlighted in green), hovering around nice area of support/resistance. We went long at the break of the high of the mother candle, with a stop loss placed just a few pips below the low of the mother candle, and a target of two times our risk. This went well for a while, and we were in profits of around 1.5% of our bank. However, price turned over and we ended up taking a 1% loss on our bank as our stop loss was hit. This is one of those occasions where we might have gone to breakeven after the bearish pin bar formed at the top of the chart. On this occasion, our trade just did not come off – but we have to accept this as a part of the game. That’s it for today, and I’ll be back with more tomorrow…

 

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