On June 4, 2014, we received an Ichimoku Forex 5 time frame Sell email alert on EURUSD currency from www.ichimokutrade.com. Here is the email alert:
The EURUSD has been consolidation for a while but it is still bearish. Since all the time frame were bearish and a news announcement coming, we setup for a breakout trade. We will allow our rules to protect us from a max risk. The entry was 1.3581, initial stop of 1.3624, and a preserve mode of 1.3518. This would give us a max risk of 42 pips and a min. reward of 63 pips. On the breakout, we are looking for a reward/risk of 1:1 when we place the order so it will become a 3:1 reward/risk when we enter the trade. Here is the chart setup:
During the news announcement, the trade was entered and quickly got to preserve mode within the same 120m bar. As a result, we moved our stop to break even. On the next bar, we got stopped out at break even (not including spread).
EURUSD in fact, completely reversed the entire downward movement and went back to the top of the consolidation pattern. It is the summer and a lot of “shakeouts” will occur. The key is not to panic and allow your system to guide you through it. Nothing was lost on this trade and even if we got stopped out at max risk, it was only 42 pips for a 2h our chart. That is a very low risk considering the average trend on the 120m is 150-300 pips.
With some advance money management techniques, we could have exited half our positions at preserve mode and then change the stop for the rest of the positions to break even. This way, we will have profits.
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