Open trading account 
Yesterday I've got in a long EUR/AUD position which I had to mange according to current market conditions. If you have been reading my blog you should know by now the importance of trading in the direction of the trend. I want to emphasize this: that no market is to high to be bought or to low to be sold. When trading with the trend you have the momentum going with you, and even though the market starts moving against you by having the momentum on your side you'll find that more often than not the market will give you the chance to close your position at BE or at least to minimize the loss, that's the beauty of trading with the trend.
In Figure 1 you can see the price action on the 1h chart and how this trade went out to be a profitable one. Prior to enter my trade we where already trading in an 150 pips trading range. You can see that I din't wait for that range to be broken out but instead I entered a long position in anticipation of a break to the upside. When you have the bigger trend going with you you no longer need to wait for the confirmation.
By measuring the length of this trading range we can project how far the market will move once we break out of the range, so our target should have been at 1.5300. However I decided to set my take profit order at 1.5260 because based on the weekly chart (see Figure 2) this was a strong resistance, although now after the facts we can see that the projection worked as the market already hit 1.5300.
Although I was trading in the direction of the trend you still want to protect your gains, I trade very defensive so that's one of the reason why After we broke out from that range zone and seeing the momentum slowing down I decided to move my SL closer to the market price. When trading this breakouts you want the momentum to keep going until your projection target is hit. The second reason why I decided to move my SL closer to the market price was because the Unemployment Rate and Employment Change where scheduled to be released last night so I didn't wanted to market to spike against my position, as volatility during the release usually is very high.
It seems that I was right to protect my position and move my SL as the market indeed spiked down to 1.5177 before to resume to the upside and hit 1.5260 and than 1.5300.
Best Regards,
Daytrader21
- Figure 1. EUR/AUD 1h chart.
In Figure 1 you can see the price action on the 1h chart and how this trade went out to be a profitable one. Prior to enter my trade we where already trading in an 150 pips trading range. You can see that I din't wait for that range to be broken out but instead I entered a long position in anticipation of a break to the upside. When you have the bigger trend going with you you no longer need to wait for the confirmation.
By measuring the length of this trading range we can project how far the market will move once we break out of the range, so our target should have been at 1.5300. However I decided to set my take profit order at 1.5260 because based on the weekly chart (see Figure 2) this was a strong resistance, although now after the facts we can see that the projection worked as the market already hit 1.5300.
- Figure 2. EUR/AUD weekly chart.
Although I was trading in the direction of the trend you still want to protect your gains, I trade very defensive so that's one of the reason why After we broke out from that range zone and seeing the momentum slowing down I decided to move my SL closer to the market price. When trading this breakouts you want the momentum to keep going until your projection target is hit. The second reason why I decided to move my SL closer to the market price was because the Unemployment Rate and Employment Change where scheduled to be released last night so I didn't wanted to market to spike against my position, as volatility during the release usually is very high.
It seems that I was right to protect my position and move my SL as the market indeed spiked down to 1.5177 before to resume to the upside and hit 1.5260 and than 1.5300.
Best Regards,
Daytrader21
