Trade Example – Silver

Filed under: Learn Forex Trading |

We haven’t had any live trades come to fruition today, so as an alternative, I would like to run through a trade setup that we didn’t take. The trade was on the XAG/USD pair, and for those of you that don’t already know, this is the pair that represents silver.


Figure 1.

If you first take a look at Figure 1, I will talk you through the trade setup. As you can see from this daily chart, the 8-day exponential moving average is crossed above the 21-day exponential moving average, and it has been for some time. This instantly tells us that the pair is in a bull trend, and we can confirm this by a visual inspection of the chart, which is obviously moving up from left to right.


The reason that I didn’t take this trade was because we had already attempted a similar setup and it had failed. This was the bullish pin bar in the middle of the chart, which went to 2R but eventually hit our stop loss. I worried that the trend was losing momentum and was entering a period of sideways consolidation, so when this second pin bar appeared, after some thought, I eventually chose not to take it.


Figure 2.

However, if we had taken this setup at a 50% retracement of the pin bar, with a stop loss just a few pips below the low of the move, and a target of two times our risk, we would have had a 2% rise on our bank by now – and this can be seen in Figure 2. So we can feel a little unlucky with that one given that the first setup did not work out. However, the good thing about the forex market is that there are always plenty of more opportunities; and hopefully, some of those opportunities will present themselves tomorrow.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>