The
idea is to delay your entry until the direction of the day's price action is
clearly established. In that regard we are going to wait until the price
actually breaks through
yesterday's
high or low by 25 pips then hitch our wagons to the day's remaining rise or
fall.
Long Entry:
If the price has broken yesterday's high and
is rising, we'll open a long position.
Short Entry:
If the price has broken yesterday's low and is
falling , we'll open a short position.
The
old saying, “go with the flow” applies, but traders use their own
saying
that says, “the trend is your friend”. With this strategy it certainly is and
not being the kind of people who want to argue, we'll gladly hitch our wagons
to the trend and ride with it for the rest of the day.
Today's
candle (green) opened at 1.78285, dipped to 1.77826, but then stopped
and reversed, heading sharply higher. If you had opened a short
position when today's candle opened you would have had a winner at
first, but when the price stopped and reversed
your
winner would have quickly turned into a loser. By waiting for the
dominant trend to establish itself you would have avoided the
dangerous stop and reverse and hitched on to the real daily trend
which was UP.
When
the price rose past 1.8032 our long entry order was triggered and we
rode it out to our take profit price of 1.8082, a 50 pip profit.
A
short trade never opened because today's price never reached below
yesterday's low let
alone
reaching 25 pips below that at 1.7705. Meanwhile, the long trade did
not open until the price rose up to 1.8032, which represented a clear
break from yesterday's high.
Now
I know you're already saying, “Fine we made a 50 pip profit, but
what about the rest of
the
day! You're giving up a lot of profit!”.
Profit
Target 50 pips
Stop
loss for buy 2 pips below the low of the bar entry.
Stop
loss for sell 2 pip above the high of the bar entry.
Move
stop loss at entry price after 30 pips in gain.
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