The benefits for this are immense and the biggest for me is giving me a lower risk profile. A lower risk profile, if using a percentage of your account for position sizing, allows for a great size.
This chart has price pulling back into a zone that utilizes Fibonacci retracements and symmetry. The upper line indicates the closest swing high level that needs to be broken to resume the uptrend.
The issue is that the risk on this trade would be over 100 pips which on this time frame it is far too much.
An intermediate Forex trader would want to find a way to enter the trade closer to the market turning point. To do this, we dial down 3-4 time frames to fine tune our entry and have a smaller risk profile.
This chart gives us two different entry points. The first shows a minor swing level prior to price hitting our trade decision zone.
If price rallied past this price, we could be in the trade with a risk profile of 78 pips. A
What happens though is price starts to rally, pulls back and gives us a second area to enter our buy stop order at area labeled “2”. We get in at 51 pips of risk when utilizing a 5 pip buffer. The trade triggers, pulls back to above the swing low and then heads to the upside.
This first intermediate Forex trading tip slices our risk in half allowing for a bigger risk profile and if the trade works out, bigger profits.
Since profits are what we trade for, it makes sense to want to maximize your return on each trade set up. Our next Forex tip for intermediate traders is all about banking as much profit as the market wants to give us.