Quick Tip On Taking Profit

Knowing where to take profit is a bit of an art, but these tips will help you develop a process you are comfortable with.
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Latest posts by Arno Venter (see all)

We have a quick question here in the Q and A section, asking why exactly did we take profit at the 6950 level for the Aussie US dollar in today’s session?

So I think this is a good question to do a quick lesson on, on why we we have specific price targets when we trade.

So, obviously in today’s session for the Aussie US dollar, and not only for the Aussie US dollar but also for the Euro US dollar, we had that upside bias. Now, both of them was driven to some extent by a risk on turn but we also had positive data points coming out in the form of PMI matrix, which gave some potential upside for the Euro as well.

So we traded both of them to the upside versus the US dollar. We had a potential entry zone for the Aussie versus the US dollar coming in at the 69 1069 150 area and for the Euro, we had that entry just above the 112 80, actually just off to the PMI data release.

Now the reason why we chose to take profit on the Aussie dollar at 6950 and reason why we chose to take profit on the Euro US dollar at 113 30 isn’t because we don’t think the sentiment is still valid, the sentiment is still valid for both these two trades.

The reason why we took off the trades at these levels were because they offered as a high probability area in both cases where we could expect some resistance to come into the pay.

Now whether you’re trading to the upside obviously you gonna be looking for resistance, when you’re trading to the downside you gonna be looking for support. So looking at the Aussie versus the US dollar, the reason why we chose 6950, firstly, it’s a psychological price handle so we’re sitting at that 6950 zone.

Apart from that we also have confluence of the r1 or first resistance of the daily pivot, the classic daily pivot. We also have the 80 or higher sitting at the 6960 and we have this most recent FEV value highs coming in on the 16th of Jan, 16th of June, sorry. So looking at this area, this area did offer us a great high probability opportunity or at least area we could expect some resistance to come into the P.

Now had we have known obviously ahead of time, remember when we traded this, we didn’t see any of that, so hindsight can sometimes play tricks on our minds.

When we traded this, that is the only view we had. So looking at that from all the available information, this was a good zone to either bank some pips, take a full profit or at least just reduce some risk on the trade which is also something we we normally say, you can either choose to take your full risk at this position or at least reduce some risk meaning, that you move your stop loss to break even or you lock in some profit by moving that stop a little bit higher.

So the reason why we always choose a safe target for the day you run, is we always have two things in mind, we have our normal technical tools in mind like support resistance areas, FEV value zones, the open to the downside and we also incorporate that with the other tools we have like, the r1 and the s1 pivots, the ADR high and the ADR low, so this offered us a high probability area to look for some profit.

Of course, yet in hindsight, we saw the market, slice straight through that level, and that will sometimes happen. But we’re happy to take off an hour trade for a 30 per profit and with this type of daily daily sentiment trade to the upside. Looking at the Euro versus the US dollar, very, very similar picture there.

If you followed our first videos for the day, obviously, the way I traded this personally is, I waited for the PMR matrix and jumped in and I’ve got a full add around 112 83 How I traded this is I took two positions The first one I took off at the all one pivot again because we have this most recent high, as well as that 113 psychological level and the old one.

So we have a high confluence area to expect some resistance but I didn’t expect that to have the only thrust to the upside for the, for the P there was reason to believe this P could continue upwards, due to the sentiment in play right now in the second target we have was at the 113 30.

Now, why the 113 30? We have the 113 50 just above that, we have a very significant daily, trend line also extending just above that area. We have this most recent high is going back to the 16th of June, the 12th of June and we have the IDR high.

So we have a confluence area Yeah, a zone where we’re gonna expect at least some resistance to come into the P. Does that mean that we think the sentiment stops when it reaches this level? Of course not. It just means that this offers us a great opportunity to bank some pips, reduce some risk with this expected move to the upside.

So by no means do we think, when we reach these levels, the sentiment will automatically go away.

As long as the sentiment is in play, the P can continue inching up higher but when we take these type of day trades, we’re always looking for that higher probability zones, that gives us the highest probability and highest conviction to look for some potential resistance or support if we’re trading to the downside for the base. so I do hope that makes sense.

Any other questions with regards to this, don’t hesitate to let us know.

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