I hadn’t intended to dwell on this setup so extensively but today’s Dipper illustrates both the validity of the premise and the effect of trailing stop losses. The 3:00 entry setup was a bit iffy but the trigger parameters were met and accompanied by a bullish parabolic signal and my ole reliable 8 bar linear regression line.
In addition, price was above the 8/8 hi/lo channel so all things were a GO. EUR popped another 40 pips in the next 45 minutes, then pulled back 15 pips (my previously stated trailing stop/stop loss) before another little surge up (on declining volume) which tacked on only 8 pips above the previous high. A picture perfect hairy top formed at this point (4:30-5:00), still on declining volume and then all the technicals fired Short (or Cover) at 5:10. Had you simply gone to sleep at 3:00 and left the trade to play out you would have either been (A) – Stopped out at 4:10 on the 15 pip trailing stop trigger for a 20 pip gain or (B) – Closed out at the Dipper 8:00 time stop for a 30 pip gain. Either way, a smooth, controlled trade with minimal risk exposure.
Prior posts in this series:
Related posts:
