The anatomy of a Foreign Exchange trade

  

While we think in probabilities here at Omicron FX, which means that any one trade is not significant in itself during normal trading, it is nevertheless instructive from time to time to examine particular trades from the point of view of checking the validity of our assumptions. We like to call this “examining the anatomy of a trade”. A type of post-mortem, if you like.

On August 29th we identified and wrote about a formation in the gold daily chart which, along with fundamental considerations, also discussed in the blog, qualified it as a High Probability (HP) trade.

Running the Omicron FX Silver Trigger routine to trade gold on that day and setting the parameters so that only a short trade would be entered, in accordance with the technical and fundamental analysis, results in the outcome shown in the chart above. Two percent of equity is placed at risk and the routine is set to take off half the position when one percent profit was attained, leaving the balance to run until stopped out by the trailing stop.

Current paper profit amount is close to five percent of equity. Some profit has been taken off the table and the Stop Loss level is well below the entry, or Break-Even, point, which locks in more profit.