Monday, August 3, 2009

08/03 Day Trading FOREX

Today I had two trades, they both went my way, however, the first trade failed to reache the target at the limit and then reverted to hit my stop in a quick reversal move. It is the second time I have this scenario, and I believe they'll continue to happen, as the price target is not something set in stone, it is just a measured expectation based on some mathematical rules (Fibonacci calculations).

From now on, I'm adding a new rule to avoid similar scenarios: Whenever a position goes to about 80% of the target, I should move my stop to scratch the trade at a small profit if we revert back down without hitting the limit. It simply doesn't make sense to watch price revert and give up all the profits on a shor reversal.

1) Long GBP/USD: Took the trade, as I mentioned, it moved in the right direction but stopped a few pips from my limit. Ended up taking a loss on it. -3.65% ROI

2) Long AUD/USD: Took this trade after the breakout and retracement. I got slipped in my entry and got long several pips above my entry price. I rode the trade to the target and got out, notice I only got 1/3 of my expected profit because of the entry. +1.18% ROI

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