In “Breaking even” (below), we can see our risk control at work. The short trade in the AUD/USD initially went our way but then it failed to reach its target. Luckily, it has moved far enough into profitable territory (50 pips) that we had moved our stop to breakeven. Analytically speaking, the price hit a major demand zone and shot higher. Our entry price was 0.9682 on June 1 with an initial stop loss of 0.9772 and a profit target of 0.9502. The stop, which we later moved to breakeven, was hit the same day.
Over time, this trading strategy works. As with all systems, though, it’s imperative to follow the rules and to always trade small so you can stay in the game. If the system doesn’t work for you, either because of your risk tolerance or your time frame, then move on, but don’t modify the system or ignore trades. The trade you skip may be the one that puts you in the black. Above all, however, don’t stop learning. Commit yourself to ongoing education and explore new opportunities with discipline and restraint.
Azeez Mustapha is a professional forex trader, forex signal strategist, fund manager, researcher and coach.