As our Scandinavian short, USDSEK, hits our first profit target giving a gain of 5.7% to clients who cashed out, the level the pair now is at is critical.
But for those who remain in the trade, the question is: Will it stop and reverse, evaporating some of our profits until we are stopped out by our trailed stoploss? Or will price continue in its downward descent making us yet more money?
Who knows? I certainly don’t! The market could do anything at anytime, right? All we have to work with is what the chart is telling us with its probabilities and recurring nuances.
Staying in the trade in pursuit of more profit is the extra risk we will take by staying in the market longer. But where’s there’s risk, there is reward.
Clients who closed out of the trade took a cool profit of 5.7% off the table last night accepted a higher probability outcome in exchange for a lower reward, whereas those who are still in the trade and waiting for it to get to out ‘take profit 2 level’ will understand that they are taking on more risk by staying in the market in pursuit of the extra 3% they would bank if price did hit their second target (the market could go the other way after all!)
Our first target which was the exit point for many who wanted to cash in their chips and enjoy a high probability, profitable outcome but it also represented a technical level which price could stop and reverse on.
As you can see on the chart, the fact that price is interacting with the upward sloping trendline, making medium-term higher highs and higher lows does give us a clue based on what’s happened that it could do the same again.
Not exactly great news for those still in the trade!
However, those who are able to see the bigger picture on the weekly chart will see we are still in a major downtrend making key lower highs and lower lows and as this ‘higher order’ timeframe is stronger than the daily, is more likely in fulfilling what is likely to happen based on probability (ie. It continuing to go down!)
So what do we want to happen next with USDSEK?
All we want price to do is close below the trend line support – the very level our first take profit target was at as it is currently an obstacle in the way of our second take profit level.
Once that happens, it will no longer be valid as a significant ‘road bump’ and we can continue our hand in the trade with less “technical interruptions!”
It hasn’t done so yet but this is what we want. Does the market care about what we want? No really! But if price closes below and it continues to go in our favour, we will be rewarded for taking on the extra risk (ie: going for a more aggressive target). However, if it stops and reverses at this level then we have trailed our stoploss to lock in profit along the way.
Let’s wait and see – content in the knowledge that profit has been locked in by our trailing stoploss so, regardless of the outcome, we will still make money from our USDSEK short.
That’s set-and-forget Lazy trading price action from only minutes a day. To find out how this style of trading can benefit you and how easily you can seamlessly integrate it into your lifestyle, check out our flagship programme: The Lazy trader Ultimate.