Adding to a position can be a great way to take advantage of a strong trending move. Below we have our entry pictured from the April 2nd edition of Chart Of The Day. Our preference was to sell the EURGBP at .8275 on a break of triangle support. Our entry was executed on April 4th, with price cascading through previous lows. Initial price targets were set looking for 240 pips of profit. As the trend gains momentum and heads in our preferred direction on the creation of lower lows, we can also look to maximize our market exposure by adding additional lots to our trade.
Below we can see the updated 6Hour chart for the EURGBP, with our current open position. Adding another lot can be as straight forward as finding our next line of support in a down trend. In order for the trend to continue, price must break the standing 2012 low established at .8220. This is considered the next natural level of support and is a great spot to begin looking for a fresh breakout.
Fresh entries to sell should be set, pending execution at a price of .8215 or better on the creation of a new low. Stops and limits from our previous entry can be recycled for our fresh order. New entries will offer traders a 1:1 risk reward ratio using the current stop placed at 1.8395. Limits orders are in place for the creation of a lower low at .8035. It should be noted, that controlling risk is important in any trade. When adding lots to an already open position, we should never risk more than 5% of our trading account, in the even the EURGBP moves against us.
My preference is to add an additional lot to our existing EURGBP position under .8215. Stops should be moved forward from our initial level. Limits should continue looking for our initial target of .8035
Alternative scenarios include price retracing and testing triangle resistance near .8300
---Written by Walker England, Trading Instructor
To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.
To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to WEngland@FXCM.com .
DailyFX providesforex newson the economic reports and political events that influence the currency market. Learncurrency tradingwith a free practice account and charts from FXCM.