Trade Example – When to Take Profits

Filed under: Learn Forex Trading |

I have a trade example for you today once again on the EUR/USD pair (which I am currently thoroughly testing at the moment on Forex Tester), and this time I want to talk a little more about when you should exit a trade, and watching out for price action signals that not only tell you when to enter a trade, but also when to exit one.

 

Figure 1.

Figure 1.

So, if you take a look at Figure 1, you will see the setup in question. This is the daily chart for the EUR/USD pair, and as you can see, the pair had been in a very nice bull trend, with the 8-day exponential moving average crossed nicely above the 21-day exponential moving average. Therefore, when a bullish pin bar formed, 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 move, and no target set at all – intending to manage the trade.

 

The order was filled, and the trend resumed and price continued to move up. There were a couple of black bearish candles along the way, but I did not move the stop up as it is important to let the trade breath for the first few candles after a trade has been initiated. There was then another bullish candle, but it had a very long upper tail. This is quite a strong, bearish rejection of that level, and at this point I exited the trade immediately for a very good 8% rise on the bank (with a risk of 1%). This proved to be the correct decision over the next couple of sessions, as price did indeed plummet downwards. That’s it for today – more tomorrow…

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