Paper trade: Closed EUR/JPY @ 135.00 (+500.1 pips)

By Paul | Published: October 16, 2009

I closed my successful EUR/JPY long just before the weekend with a tight stop.  Notice from Figure 1 that EUR/JPY is now in overbought territory.  In addition, a negative divergence is developing on the RSI from the recent 2 peaks also at 135.00.

The best thing about this trade was my entry.  However, I certainly didn’t chop this setup the best I could.  Even though I rode this up for +500 pips, I only had a 50% position size.  There were two easily identifiable adding points which I could have taken advantage of.

When EUR/JPY broke above 132.00, which was a clear short-term resistance, a day after my entry I should have added to my position then because of short-term momentum.  Another chance came at 132.50 or so.  As shown in Figure 2, when the price retested the low end of the channel at 132.50.  Both of these opportunities would have survived with my usual stop of 100 pips.

Another disappointment was that my second half of the position was stopped out shortly because I moved my stop up too soon.  I was confident enough when I placed the order to enter a full position size.  But my over-zealous need to reduce risk got the better of me.  I observed on a daily time frame but traded in the 3-hour.  To be more accurate in pointing the finger, it was my lack of patience that stopped out my other half of the position.

Anyway, I did rode the wave with a sufficient position size.  One thing I just noticed is the T formation in Figure 2.  EUR/JPY is back to where it started a month ago.  Where it heads now is uncertain.  I will keep an eye on this pair and aim to re-enter another long in a few days.  The trend is your friend.

EUR/JPY

EUR/JPY

EUR/JPY, 3-hour

EUR/JPY, 3-hour

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