TRADE #1 OF STAGE 4 ENTERED: SHORT USDCAD: T1 HIT FOR PROFIT; STOP LOSSED OUT FOR REMAINDER 3 CONTRACTS. 1 WIN 0 LOSSES FOR STAGE 4..

Here is the modified/streamlined forex plan and a potential set up. Daily chart of USDCAD shows it to be below the 55 DEMA which means I should be looking at a short position. Looking at the 4 hour chart, the stochastic is rolling over to the down side and the pair is also below the 55 EMA on the 4 hour chart. So based upon the characteristics on the 4 hour chart looking as if the pair will decline and the fact that the daily chart is below the 55 DEMA, I am going to set an entry near 1.0480 and then use Fib extensions to get targets. UPDATE: 02 19 2010 The trade was entered on 2.18.2010 at 1.0474 and a stop loss was placed 75 pips above the entry price. So the stop loss was 1.0549. Using the 4 hour chart, Fib extensions were used for targets. T4 is clear down at 1.0010. That would be a 464 pip move. Talk about a long short, but achievable. Click on the charts to see the text associated with them. UPDATE: 02.21.2010 So the trade will be profitable. I will move the stop loss down to near the entry so that I can preserve my profits in this trade. One problem I am having with this one is that when I move my stop loss down on my remaining 3 contracts, I run the risk of getting stop lossed out and then the pair continuing the downtrend. This is the typical error that most traders do - taking large stop losses and not letting winners run. I can't but help notice too that on a 4 hour chart, the pair does a very good job at obeying a 55 DEMA. And the other reason why is that the daily chart also had the 55 DEMA also right near the 4 hour 55 DEMA. There is the correlation on using multi-time frame charts. UPDATE: 2.23.2010 So the trade took a turn for the worse as the USD gained major strength today and took the USDCAD pair to the upside. I looked back at my blog from a few days ago and I was afraid of not letting my winners run and putting my stop loss way too close to the current price. This time, I am emotionally happy that I put my stop loss right near the entry. Oh, yeah. Just for giggles, I put one contract stop loss a little higher to see if I was placing my stop loss too tight. This one got stopped out too. So here is how the trade panned out: Entry: 1.04744 T1 - profit at 1.03867 (87.7 pips or $877) Stop loss out for next contract at 1.04687 (5.7 pips or $57) Stop loss out for 3rd contract at 1.04700 (4.4 pips or $47) Stop loss out for 4th contract at 1.05118 (-37.4 pips or a loss of $374) So my profit for this trade was 60.4 pips or $604.