Trade Example – EUR/USD

Filed under: Learn Forex Trading |

I have a trade example for you today, again on the EUR/USD pair (the pair for the euro and the United States dollar), which I am thoroughly testing on the forex testing software ‘Forex Tester’ at the moment. If you take a look at Figure 1, you will see the trade in question, and I will run through how I managed this trade in order to extract a 3.9% rise on my virtual bank.

Screen shot 2013-04-23 at 09.11.26

Figure 1.

Figure 1 shows the EUR/USD pair at the end of 2011. Price had been stuck in a box range for some time, and I was looking to take long trades at the lower end of this range. I did indeed take a long trade, as you can see, when the large bullish engulfing pattern formed. However, I was stopped out of this at breakeven. However, another bullish signal formed around this level, confirming the bullish momentum – this time in the guise of a pin bar. This time, I put an order in to go long at a 50% retracement of the pin bar, with a stop loss placed just a few pips below the low of the pin bar, and with no target set at all (intending to manage the trade).

 

Figure 2.

Figure 2.

Figure 2 shows how this trade played out. The order was filled, and price began to move up. I trailed the stop just a few pips below the low of each candle, and this allowed me to stay in the trade until the large bearish candle at the top of this figure. At this point, the low of the candle was broken, and the stop loss was hit for a 3.9% rise on the bank. This proved to be a good level to get out at – as price then subsequently moved back down.

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