Wednesday, January 25, 2012

25 January 2012 trades - AUDUSD continuation pinbar

I spotted a trend continuation pinbar on the AUDUSD this morning and put in a buy limit on the pinbar's 50% retracement level. This was hit quite quickly and price continued to tumble down until a sudden reversal. The reversal was due to the release of lower-than-expected Australian CPI figures, strengthening the Aussie. This will give the RBA more scope to lower interest rates in future, so I think this rally will be short-lived.

In any event, I closed my long and took profit at around 1:1 risk:reward ratio. One of my biggest issues is psychological. Once I'm in profit, I want to close my trade rather than let it continue to run and potentially earn more. A 1:1 risk:reward ratio is very conservative and my backtesting has proven that 1:2+ is more rewarding in the long-term.

I earned around 40 pips from this trade.

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