There is an old saying that resistance, if broken, becomes support. Well the Euro/USD pair is testing that theory right now. It it doesn't hold at these levels, Then I would agree. Everything is on a knife-edge right now - with the JSE being propped up by commodity increases and a weaker rand
if the euro closes below the 20ma on the 5 min chart and your histogram has turned red not more than 5 bars ago sell short with a 20 pip stop. bank half profit at 20 pips up and move stop on remainder to break even and ride the channel of sd1/sd2 all the way down till channel broken/20 ma broken....your choice.
Hi Ninja, I have done a lot of simulation on a strategy that sells 50% in order to maintain breakeven, and I have found time and again that the strategy is flawed (not saying that yours is!!). My findings were that statistically, the number of trades that hit the 1st target and then pulled back towards the stoploss were usually less than 20%. The remaining 80% of trades either hit the second target or were stopped out before hitting T1 (this was for a range of studies). What this means, is that assume 50% success ratio for 1st target (T1) - then your success ratio for T2 is usually around 40%, i.e. only 10% fail. So if you are cutting your holdings at T1, then you are actually significantly diminishing your returns, since the potential for T2, at that point, is usually in excess of 70% and significantly outways the potential for a stop.
depends what time frame you trading......this is a scalping technique i use and my T1 is all i really bank on.....remember i bank clear profit even if trade reverses....do not break even. if t2 and beyond are hit its great but i am scalping and leaving it to run should it wish. Worst case scenario small loss, mostly t1 is hit and account grows. My longer term trades have a wider stop however i enter on BB and RSI system, not ma and histo.On the 5 min chart that technique works great as a scalping tool......to catch the longer runs i trade the 15 min and enter in line with trend on extreme ob/os in counter trend pull backs as price moves from sd3 back to sd2 and rsi crosses its threshold in direction of larger trend.
on the 5 min chart i find after hitting t1 in about 80% of the cases i am stopped out at break even and bank half the position at t1. Using this technique i never ever take the big hit and grind out daily profits. the remaining 20% can run for a long period and it is these trades that really deliver. The rest give me small consistent profits and manage my losses very effectively.