The buy stop order for the USDJPY nicely executed during the Friday trading session, entering at 81.25 and the stop loss at 80.50 (75 pip risk), now we are waiting for the Profit Target to be hit and close out half the number of lots removing the trade risk.
So we now have 2 positions open in the JPY, the initial position that opened after the reversal bar was formed, and this new one.
The AUD we are sitting on the sidelines for the moment till we get a little more info to the story.
Another thing we need to look at is having a trailing stop loss on the trade, following and locking in profit as the market advances.
Although we remove or at minimum reduce the risk by taking profit at a Profit Target it is a good idea to use a trailing stop as the trade advances so that you can lock in as much profit as possible.
So have far away do you set your trailing stop?
Some traders will trail the market by a standard amount, for example 50 to 100 pips.
But a good method we use is the natural support and resistance levels found in price movements – remember in a previous post we looked at angular support and even swing charts. Check out the image below – see in 2 of the bull moves I placed a small green line underneath each swing low, and towards the top the trade naturally closes itself out at one of these levels.
Sure you never always get out at the best price, but this strategy as your final exit allows you to ride some very nice big trends.