Euro Yen trade entered the am off of support.
Forex and Currency trading has a lot of volatility. It is a very large market and the settings are quite different than Index Futures trading or equities.
This is a trade between the Euro and the Yen – Euro Yen trade or the EURJPY trade. We entered the trade with a bounce off of support and loss of momentum. When the Euro Yen started to consolidate between 136.93 and 137.050 started a search for an entry off of the bottom of the price range.
When the pattern formed, we entered the trade with a stop just below the swing low of 136.920 . The stop was then moved into a profitable position when we had 6 pips of profit built into the trade. This is a very tight stop, but it is in profit, so there is no cost to the account. The sizing is appropriate for the risk. There is a very high probability this stop will be taken in this consolidation zone, if it does, it will be in profit with no cost to the account. If it does not take the preventative stop then the target is at a 1 to 10 risk to reward ratio with no risk in the trade.
Psychology and System Trading in the Euro Yen pair
Trading is a lot like tennis. You have to be able to stay in the game, and that is why the most important factor to capital preservation is risk management. We can literally take an unlimited number of trades when we are able to move our stops in to profit. Since our short term trades transform to swing trades 20% of the time, being able to leverage the probabilities for success while managing tight stops create many opportunities for profit. Remember to always follow your rules for risk management, trade execution and setting targets. If you are trading on the fly with out a written trading plan, you are gambling. Consider your trading as a business. Always use a written strategy as you will have a tendency to react to circumstances versus follow a plan. This is one of the biggest hurdles traders, even professional traders face, following a written plan. If you can’t write the Entry, Risk Management and the targets down – Don’t make the trade.
This Euro Yen trade was taken in our manage trading account, and is only shown as an example of managing your stops in a currency or forex trade.
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