Live EUR/JPY trade

This is how I entered the market based on the bearish engulphing candle we spotted earlier.

At the close of the candle I placed a sell stop order just below the low of the signal candle. Of course I did use a stoploss and my lot size was small enough to keep the risk to the account well under 1%. So the idea is that the candle would be a strong signal and that price would continue to move down, which is what happened. Today I saw that my trade is in profit and I have moved my stoploss towards the current price. This has effectively 'locked-in' profits and I will continue to move my stop if the price continues to move down.

I could of course also simply close the trade now and book the profits at the current level. There are as many ways to manage a trade as there are traders. Another way some people use is to close a portion of the trade and then trail price. You will have to find out what you feel comfortable with. The method I am using gives the trade potential to run into higher profit than if I chose to close it at any given point, the trade-off is that I will lose any of the pips between the current price and my stoploss when price does stop me out.

Why trade Forex?

I trade forex because of the leverage. Again for a very small upfront investment I can control a large position. I would like to say that there is no commissions but since you 'pay' the spread on all your transactions I really can't say that. However, it does seem like a painless way to pay to play.

Key to taking positions is understanding how much you are risking when you entering a trade. This is a great reason to trade demo for a while, it will help you to understand what different lot sizes over different pip amounts will cost the account if the stoploss is hit while the trade is not in profit. For instance if .01 lots result in 10cents/pip then a 100 pip stoploss against my position will cost me $10.00
So if I want to keep my risk down to say 1% for any given trade I will need to have at least 1000 in my account for every 100pips risked at .10/pip. Once you have mastered how much risk any given stoploss represents to the account you can beging looking for entry triggers.

USDCAD Update

I don't want to see a trade that has moved this much in my favor to turn into a loser so I've moved my stoploss up to break-even +4 pips.