One of the keys to successful trading is you got to be aggressive when your call is correct.
This way you can build good trade into a massive trade.
Now, you are not going to find these trades every week, but once every month or two, trades like these are going to make massive profits for you. This is the only way you can survive in this game. Most of the trades will be small losers or small winners, but then BOOM, you get trade like this that will make your whole month or even a quarter.
On August 16, 2016 I’m looking at GBPCHF Daily (D1) chart. I see a nice long-tailed pin bar bouncing of lower Bollinger band (LBB) and last support level around 1.2520, suggesting a potential double bottom pattern. (I've marked this support level weeks in advance, after the pair created new lower low on July 6)
I like this pin bar, but I’m also looking at GBPUSD and GBPJPY on the same day. I prefer the GBPUSD Engulfing bar and GBPJPY cleaner pin bar over this GBPCHF pin bar.
It’s a close call, but I pass on this.
In hindsight, even if I would enter this pin bar, I would probably gotten out with break-even trade after the opposite pin bar on August 16. (Just to note, my two trades on GBPUSD and GBPJPY that I choose over this pin bar got stopped out, each for 1R loss)
On August 19, I see another pin bar that shows that this support level 1.2520 is holding. Since it’s Monday, I wait for the market open to make my final decision. (I want to make sure there is no weekend gap. I would pass on this trade if it gapped past my entry point). There is no gap, so I’m happy to place this trade.
I use BUY STOP orders 3-5 pips above the signal candle, as my projection is that - if price breaks above this pin bar, it has high probability that it will continue to rise. My entry price is 1.2587
I typically place my Stop Loss (SL) around 30-40 pips below signal candles close or around 50% retracement of the signal candle. In this case 1.2530 is my SL price for total of 57 pips.
I don't like to use large stop loss as, if my analysis is correct, I would anticipate the price to move sharply in my favour. If the price lingers around and stays near close price of the signal candle, I would be out of this trade anyway.
I look for a take profit (TP) areas within the last swing highs or opposite Bollinger band. There are no real worry signs till we get to 1.3000 mark. Still that is more than 400 pips away, so I decide to split my order in two parts and take some profit around the swing high from August 8, that looks inviting.
To sum up my orders are: