6/16 Analysis: Minimize Losses
Right before London opens, we have a strong EUR (pink line) and a weak AUD (orange line). We aren’t getting the real steep lines we look for but it is a strong currency getting stronger and a weak currency getting weaker.
- EUR/AUD BUY
You can see on today’s trade that if you were to enter 10 pips above the open price (like I teach in my breakout strategy), price would have went in your favor initially but by only 13 pips before reversing and stopping you out. This would have resulted in a losing trade.
This is important to show you for 2 reasons:
- Losses are inevitable.
- Even though we are identifying higher probability trades using strength against weakness, that doesn’t mean those trends can’t reverse.
The good news with this trade is if you were trading my breakout strategy, it comes with a trailing stop loss. So, since the pair initially went in your favor by 13 pips you would have only lost 7 pips even though your initial stop loss was 20 pips. Gaining the maximum while losing the minimum is a recipe for long term trading profitability.
Watch the video analysis here:
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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