How to trade the Australian dollar

This wasn’t an aussie dollar trade because there haven’t been many good australian dollar trade setups recently.

Dan Armitage of the www.fx500club.com live online trading school was suggesting caution again this morning due to the lack of any clear direction in the forex currency markets. This is the second morning that we have done this and I cannot fault his logic in keeping the less experienced of us out of risky trades. It takes great discipline to stay out when things are not clear so there was a great lesson for us all again today.

However me being the cheeky little trader that I am becoming I couldn’t resist a pair of high probability low risk trades off the 5 minute charts. They were both trades that Dan had pointed out as possibilities but not ones he wanted to call as live trading signals for all to trade (because they were not strict fx500 club setups).

They were a euro usd and a gbp usd trades.  They were both long and they were both breakout trades taken off support and through descending trendlines. The trendlines were part of a triangle chart pattern. The euro usd trade chart is below.

As mentioned this was a breackout trade, you can see from the chart all the moving averages were bunched up together acting as support under the price, the daily pivot was also below which is the ideal place to put a fairly safe stoploss. The target was the old high at 1.4006. I entered at 1.3982 my stoploss was just 16 pips away, just a 1 to 1 risk reward but worth a punt with a 50% normal stake.

I closed 75% at target and let the other 25% run, as you can see it retraced almost to my stop then went back up, I wish I had added again at that point and nearly did but chickened out. My last 25% got stopped out but it could have flown up, oh well worth a punt and if you aint in it you can’t win it!

The other trade was gbp/usd chart below.

Almost identicle to the euro usd trade but with a better profit target. Once again bunched moving averages below acting as support, clear air above with a recent resistance level / old high as short term target. Just another punt on the 5 minute chart. A small 20 pip stop with a 45 pip target so worth a go. As usual I closed 50% at 20 pips profit, closed another 25% at the old high and target, 1.6290 and let the rest run. It retraced almost immediately so this time I did add 50% back on at my original entry 1.6246 and closed that again when it hit my original target. A perfect trade in a very tricky market.

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Always Remember.

Keep your risk as a percentage of your capital low (1%), equals stress free trading.

Always work out potential losses before potential profits.

We are paid to take risks, if you aren’t in a trade you cannot win a trade!!

Buy off support and sell off resistance.

Bank partial profits early and move your stop loss to break even as soon as you can.

I am learning how to trade these setups and indicators across all time frames with the help of the fantastic team at the www.fx500club.com They have a live forex chat room and share their charts so that you can watch them find potential trades in real time.

They also have a school for learning how to trade longer term charts at www.fxmonkeyschool.com.

The fx500club and fxmonkeyschool, forex trading school don’t just trade charts and indicators alone, they teach us to use correlation of the whole market before entering a trade. It truly is the best place to learn how to trade forex properly, safely and profitably. It’s all about the pips and about protecting your capital.

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