We had an exciting day today with the Non-Farm announcement! USD (while many were expecting bad news) delivered a VERY positive result and sent the US Dollar searching for new highs.
We have 2 trades that are affected by this announcement.
The first is a Long USDJPY trade that we had been patiently holding for several days expecting the huge base aroun 117 to hold and also thinking that the USD strength would win out over the JPY.
That trade was, of course, significantly helped by the strong news for USD. We went from a break-even position, to +165 pips in no time.
Here’s where we stand on that trade now:
(click to enlarge)
We have a small bit of profit locked in and are looking for a bigger target on this trade (will trail the stop tighter next week when the structure rebuilds).
The second trade was one that we entered because of the Non-Farm announcement.
After great news for the Dollar, we didn’t over-think it too much… We just thought “I guess we should be shorting EURUSD…Again”
But, of course, it was already too late to simply jump into the trade.
The EURUSD had already shot down without us.
So we set up our channel and waited for a break and retest. See here:
Our first position is a smaller size short on the retest of the bottom of our channel.
We feel there is a pretty good possibility that the EURUSD will correct higher into the channel though so we’ve set a higher Sell Limit at about the mid-way point.
In this image, you can see the full set up of the trade, including the price levels:
You may notice that no take profit has been placed and that is on purpose.
We’ll use a trailing stop on this trade (like the USDJPY) because we feel that it’s possible that the EURUSD could crash through the recent lows and we don’t want to limit our profit potential.
More than likely, our trailing stop will get knocked out before that happens, but we want to keep the potential on the board.
Every so often we get rewarded by leaving the profit potential wide open and it is WELL worth it, so we’re doing the same thing here.
If we can even re-test the daily low at 1.1090, the trade would Net about $1,900 USD with the single position and would Net around $6,000 USD if both positions are filled.
By the way, you can see why we like the scaling in approach when you consider the $1,900 profit potential compared to almost $6,000.
Of course, if we do crash through the lows, that number quickly compounds! (fingers crossed!!!)
It should be noted that our risk is around $2,000 on the trade. For us to lose that $2,000 the second order will have to be entered though, meaning that the risk to reward is quite nice on this particular trade.
So, those are the trades we have going on as the week comes to a close.
Let us know if you are doing anything similar, maybe the exact same, or completely different.
Regardless, thoughts and comments are welcome!
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