Live FX Trading With DTT

Monday’s are usually slower trading days than Tuesday, Wednesday, and Thursday – which proved to be true again this week. In case you are wondering, slower means the number of pips movement up and down.

However, there are a couple of interesting currency pairs in vision for our DTT strategy. Take a look at yesterday’s video for more details on the pairs we had in mind. The NZDUSD and AUDCAD are still pending follow through but the EURNZD is performing well.

The EURNZD short is on its way and up +/-50 pips; whereas the risk has been reduced to 15% of the original risk. These are great scenarios because:

a)      The trade is close to break even in a relative quick time frame

b)      With a trail stop loss in place, traders have just managed to cut any potential losses short

c)       Whereas allowing the potential winner to run.

It can’t get better than that in my opinion.

Let us take a look at the AUDUSD in more detail, but we will add a simple 21 ema close to the charts as an extra reference point.

8- 4- 2014 au

Understanding the market structure becomes easier when viewing the price action in relationship with the 21 ema. I would say especially for traders that are relatively new to Forex trading – just like our DTT indicators do as well.. More experienced traders often already know (from experience and watching the charts a million times) where an ema is without having to see it.

In large parts of this uptrend, price was above the 21 ema and the angle of the 21 ema was steep. This indicates a trending or momentum mode for the AUDUSD. Price occasionally made pullbacks to the 21 ema, but the moving average was actually used as a dynamic support or resistance.

At certain points price made bigger corrections and price actually pulled the angle downwards. But notice that the angle was very mild in relationship to the upside momentum. That is because price was corrective in its nature. The overall flow and trend is up (orange support trend line). What does our DTT say?

According to our DTT trend indicator (makes life easier doesn’t it?!), the 4 hour trend is at the moment UP – even though the daily chart is not confirming this trend as yet. Despite that, there could be space for some break out trades to the upside. Let’s zoom in…

8- 4- 2014 au 2

Price bounced off of the 50% Fibonacci retracement (green) and has managed to break above resistance (moving average and trend line). Also price is above the 21 ema and the ema has a good steep angle.

If an entry is taken right here right now at market order (0.9280), where would the target and stop loss placement be?

A stop loss below the 4 hour bottom at 0.9247 would certainly be a level which price should not venture into without invalidating the entire bullish structure.

Let’s review targets to the upside. The 50% Fib has a -27.2% Fib target at 0.9333. Also, we must look at a higher time frame (daily in this screenshot) to scan for potential resistance. When placing a Fib on the daily swing high, swing low, we can detect at 61.8% Fib at 0.9340.

Conclusion: 50-60 pips upside potential / 33 pips risk. Almost 2:1, which is sufficient. Each new 1 hour bottom will be trailed stopped by 15 pips.

Will the trade work out? Who knows… Nothing in trading is a guarantee, but with proper risk management in play – there is nothing to fear. We followed a plan – now it’s time to trade the plan.

8- 4- 2014 au 3

Thanks for sharing this article and wish you many pips & Happy Trading!

The following two tabs change content below.
Winners Edge Trading was founded in 2009 and is working to create the most current and useful Forex information and training available on the internet.

Winner’s Edge Trading, as seen on:

Winner's Edge Trading in the news

  • Chris

    Hello Anders! Yes that trade is going very well, the trail SL is now at 0.9341 – which locks in the original TP I had in mind but the trade is still open so lets see if there is one more push left 🙂

    You are right that the daily DTT trend indicator was grey and hence the indicator was not confirming a full established trend. Great job! When looking at the daily there seemed be reasonable upswing taking place, so indeed decided to add some discretion in the setup.

    Thank you for the feedback and post, which is much appreciated and wish you great trading!

  • Anders

    I think you just nailed that trade a price just came up to the 61.8 fib on the daily chart you mentioned in the article. Thank you for posting this analysis and trade plan. It seems not to be a 100% DTT trade as per the rules (as I have understood them) but I think it is an excellent example of knowing one´s trading system inside out and executing a trade that adheres to the rules in principle and has a solid risk to reward.