An awesome week for trading continued today. It has been a little unusual that the big moves have been in the US session this week, but that is has been when most of the major news releases have occurred. The UK traders have moved the market much less than their usual range. The key has been to read the direction of the market, and not get stopped out for a loss, when the US news releases occur, or to enter the market after the releases, reading the direction the market will move for the balance of the session.
I had a conversation with a student yesterday about our Targets 1 & 2. These are critical to our style of trading. When I see an entry, I measure the distance to Target 2 and the distance to where I would put the initial stop loss. If the distance allows me 3 pips of gain or more for 1 pip of risk, I’m willing to further consider the trade. Most of our stop losses are set between 15 and 25 pips initially. In other words, if the stop loss is 15 pips, than I am aiming to get 45 pips or more out of the trade – to our Target 2. During the US session, for a reversal trade, if found, I’m willing to take fewer pips because there is less trading time until the London Close.
The targets that I use have very high probability! Some weeks the market may not cooperate as well as other weeks, but statistically the targets are significant and I have used them for years. They work!!! These targets are very powerful because many institutional traders are taking profits in the same areas…enough said.
Enjoy your weekend!
Good luck with your trading!