EXAMPLE Number 2

I chose this next example since it illustrates how the market can be tricky at times. Look at this next daily bar chart.

The market made a sharp down move of about 120 pips. Then, as evidenced by the close of the day (remember, the small line on the right side of the bar), it reversed and swung 155 pips. The bar itself is visually tricky since at first glace the trader sees the whole bar pointing downward! However, you must always guide yourself by the opening and closing price of the day (again, the two little lines on the sides of the daily bar). By looking at the opening and closing price of the day we can see that although it seems like a down trend bar it is not and the opposite is true. So, the first part of the strategy is fulfilled as the market moves 140 pips upward. We now want to see if the trend continues the next trading day. Let’s look next day.

As we can see from this daily bar chart, the market continues its upward trend from the prior day. After making a low at 1.7369 it swings upward 70 pips triggering our long entry position at 1.7439. A stop loss order is immediately placed 60 pips from entry at 1.7379. Also, a profit objective order is placed at 1.7539 (100 pips). It doesn’t take long and our profit objective is reached netting a profit of 100 pips.

There are some deep technical reasons for wanting a micro lot account which you’ll learn about later. Just take it on faith for now that that is what you want. I would recommend Easy Forex who is my broker.