How I traded the GBPJPY forex pair today!

Today my focus was getting short on the GBPJPY forex pair. I decide this by looking at the daily and 1 hour chart. This gives me a rough idea where I think the market is heading. This is purely a visual thing to see the direction of the trend…  nothing complicated.

What is a bit more complex is looking for an entry after you’ve decided which way you want to trade.

I’ve annotated the chart slightly differently today and I’ll go through it now.

So after deciding to go short in the market, I’m looking for a pull back to  and entering after this. My first opportunity is at number 1. You can see that the market rallied after a previous fall and when it looked like it was going to fall again, I shorted with a stop just above the previous swing high. Unfortunately, the market rallied beyond the previous swing high and I got taken out for a 37 pip loss!

My second short entry was at 2. Same sort of thing, I thought this was the top of the pullback rally and entered my position with the stop above the previous swing high. This time the market responded and it did fall. I took profit at 57 pips which was nice.

However, I must admit that my exit plan wasn’t to my gameplan. What I have been doing is planning my trades so that my exits are at a 1:2 risk reward or at the very least 1:1. My 2:1 target was actually at 131.32 but I had not intially set this in my trading platform to take profit at this level. I wasn’t in front of a trading screen and had logged in via my iPhone to see my position. Using the basic charts, I could see that the market had fallen hard and I was aware of a potential pullback so I just took profits without working out where 2:1 was. Ideally, I should have set my limit at the time of the trade along with the stop order.

Still, a profit of 20 pips today!

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Category: Forex trading, Spreadbetting, Trading