Trading range management, a lesson as it happens live.

As we write we do not know the outcome of our trade in USD/CHF that we started yesterday.

We’re hopeful that this trade will become a suitable lesson in trade management. Having entered our bet short in the chart below at the red circle price quickly goes against us. (the second chart is the same but zoomed-in).

My initial entry of the bar (lower chart) within the red circle was a reasonable bet short; however, lower wicks to the left reduce the probability and what quickly became apparent was that the entry was against a trading range of which we’d taken the worst position!

Having established the trading range, the many lines on the chart attempt to do this, we now ensure that our stop is at least ‘a measured’ move above the trading range.

We see that we have two possible trading range top lines of which we scale-into the trade at each. We are now at maximum risk for this trade, and with a turn in our favour, we may still achieve a successful reward to risk return.

However, any further assent in price will necessitate the management of a breakeven (and therefore, overall, an unsuccessful reward/risk trade).

We have one additional consideration. At 7 pm UK time this evening we have a USD interest rate decision. We do not want to have any trades open, based on hourly bars, at this point as price volatility with such an announcement can exceed our stop positions.