Friday, December 14, 2007

Anatomy of a stop and reverse trade

I try and pick out reversal spots using my system and this works pretty well. But with todays news coming out just as EURUSD was about to achieve target, my trade failed and turned into a loss. When a new lod hit there was a decision to be made. We were already below 161.8 and the market was surely headed lower, but how much lower. Where to exit this tenuous short? I drew a new fib extension from the spike of the news and the trade worked out quite well.

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