Currency markets continue to be extremely volatile as governments around the world take extreme measures to deal with the coronavirus and its economic impact. All trading sessions offer trading opportunities and if you’re going to be home anyway…why not look for some high probability trade setups?
Don’t compromise your trading plan, but adjust it accordingly for the current conditions. With the extremely large current ranges and back and forth volatility, it makes sense to me that if I have to double or triple my stop loss, that I will enter with half, a third or less of my usual position size.
There have been many great trades lately and there will always be a few that don’t work out. We are typically looking for a 2:1 or 3:1 reward for the risk that we’re willing to take… or greater. In the current market a trade may run a hundred, two hundred or more pips very quickly. Moving a stop loss to quickly protect profits may result in it being hit and missing out a large number of pips. Not moving it, may cause it to be hit after you were in a positive position. There is no magic answer, but it’s not a good idea to let a profitable trade turn negative.
I had one trade last week that I set with a 20 pip stop loss and it was closed within seconds. The market had a 60 pip reversal and fortunately, I only lost 20 pips. Another trade moved so quickly after I entered, that I was up 55 pips in a blink and locking it in.
Find a balance that gives you comfort while you’re trading so that you enjoy the art. I find it works well to take the risk out of trade once it has moved a certain number of pips in the desired direction. If the worst case scenario is you make money, than your account will grow.
Today early in the U.S. session overlap after the AUDUSD had run up, we entered short right near the .5800 figure risking 43 pips for a potential 262 pips to our daily target at .5540. This may seem like a large stop loss, but by getting the risk out of trade quickly and actively moving the profit stop lower, we remained positive until the trade closed. It didn’t run too far but it still worked out to be a nice trade to start the week.
Good luck with your trading and stay healthy!
