2nd October 2013: Trade #3

Original SL = 2 pips

Original TP = 6 pips

Reward / Risk = 3

Transaction costs = 0.7 pips

Final SL = 0.2 pips (due to slippage)

Net loss = -0.2 - 0.7 = -0.9 pips

This trade took place a few seconds after the London open and Spanish unemployment figures came out. Spanish unemployment increased by 25k rather than the predicted 12k. The news was bearish. I then checked where price was, relative to the range that had formed during the Asian session. Price was right towards the bottom of the range. To me this looked like a no-brainer, and predicted that news traders would go short and take out the stop losses just below the range, trapping longs and triggering a bear run. I promptly went short with a default SL of 2 pips. This was a tight SL for the European session, but I literally had no time to type in a carefully-considered stop loss, so used my default 2 pip stop loss. I set my initial profit target at 1.35100, 6 pips away, so my initial reward was 3R. 

Knowing how choppy news releases can be, I moved my SL to breakeven + 0.1 pip once the downward move was underway. The choppiness took me out, and I endured 0.3 pip slippage, resulting in a -0.2 pip loss. 

Price resumed its downward movement a few candles later.

What I'm curious about is why did price retrace significantly after the news release and take me out? Perhaps the longer-term EURUSD traders revealed their hand and used this opportunity to accumulate some cheap longs? Support at 1.3507 looks to have held so there looks to be significant bull support.