FOREX Chart Of The Day: Stop Loss
Are you moving your stop loss?
A common mistake in the forex market is to move the stop loss when the market is going against you.
Moving the stop loss can be a useful tool but only when it is to reduce exposure in the market.
Watch the video to learn how we are managing the stop loss on USDCHF…
Hi guys, welcome to this Blueberry Markets video update with me, John Kibbler, head currency analyst.
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In this video, we’re going to go through USD/CHF. The price now back in our favor. We’ve been in this trade for a while.
We executed on this position. At the end of August, at the start of September, we initially had that nice move up.
The price came, but all the way back, down re-tested structure kept breaking down. The Dollar was getting weaker and weaker and weaker.
It was still a very strong weekly support point, and that’s exactly why I haven’t moved stop losses, but I am going to do that going into today.
And what I did want to do in this update is just kind of discuss when sort of the right time to sort of moving your stop-losses and there’s no sort of right or wrongs to this, but what I would say is go and test a few different things out.
Now, one thing that I like to look at is when price continuously to break highs. I like to move stop losses typically under previous structure lows.
Now, the price was making that higher high pattern through here. So, it could have been a good idea for me to place my stop-loss below that low there.
If I did do that, the price would have eventually stopped me out for a small loss, but you know, at the end of the day, we reduced risk. And that would have reduced the risk by at least half going into that. So only be walking away with a small stop loss.
The only reason I’ve left this position to run is because of the fundamental analysis surrounding the US Dollar. Typically through this time of year, especially in an election year, the Dollar continues to gain strength the majority of the time.
Now, we had this on a funny move through here, which was unexpected. I was expecting the price to re-test this structure here, continue to press to the upside.
But obviously, the markets are random. It’s never gonna act in a perfect way. At the moment, the market is now starting to push back and break into these highs.
So I’m now going to start managing the trade from this position. The reason I’m going to start managing in it now is because the price is almost starting to create that uptrend again and what I’m going to do is do a couple of things.
First of all, I’m going to set an alert around about this area here. I’m going to show you how to do that on MT4 as well or MT5. I should say using MT5.
Basically, if you go to your price, you click the crosshair. You can click the middle of your mouse if I go to right-click here. You’ve got all the different options through here.
If you actually go into trading, you can set an alert and alert that price. Now what I am going to do when I’m managing this position is one of two things.
So first of all, we can move the stop loss up below that low just through there. If I was just to grab onto it and move my stop loss there, I’ve covered that position for a little bit of safety. Essentially the alert is at these previous structure highs.
The third thing I’m gonna wait for is if the price tomorrow is anywhere sort of near these sorts of highs by the end of tomorrow’s trading session, I will bank this position because I don’t want to be holding any position over the US election. Very high liquidity or very high volatility, it could go either way.
The last time we had that presidential election, the market moved nearly sort of 400 pips, and we had a bit of a nosedive in the Dollar first before it rallied. So I don’t want to get too stuck in that position there.
So what I am going to do is set an alert here by tomorrow evening, look to manage this trade in this position, close those positions out before we head in towards that US election, and go from there.
But probably we have been in this a while. You know, if you did bank the trade, that was great but, we’re looking for some further upside.
Looking good now, we’re breaking into these highs at the moment. Would be nice to see that four-hour really push on and give us a nice close above these highs.
If we do get a nice close above and we could see some further opportunities coming soon. But it’dbe interesting to see how the market reacts next week, and it’s going to be an interesting time.
I’ll do another video going over what I can what we could potentially expect to see from the US election, and that will come next week.
If you have any comments, questions or anything like that, drop a message below. I’ll get back to you as soon as I can. I hope you’ve enjoyed this trading week, it’s been very good for us, and I will speak to you in the next one tomorrow.
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