EURUSD is a great pair. When it starts trending it can make a lot of pips for those traders who have the patience and the experience. Swing Trading EURUSD requires a bit of experience. You should have experience to know when this pair is going to move and in which direction it will move. EURUSD moves big time on ECB Press Conference, FOMC Meeting Minutes Release and NFP Report release. In this swing trade, it moved big time on all these 3 important economic news releases. Take a look at the following daily chart.
In the above screenshot the red arrows mark the opening of more positions and moving the stop loss with it. Now the daily chart is not an ideal chart for opening the trades. For opening and closing the trades, H4 is the best timeframe. So let’s switch to the H4 chart below.
In the above EURUSD H4 chart, you can see the first red arrow just below the white bearish candle. This was our first position. Our entry was at 1.14413 and the stop loss is at 1.1500. The stop loss is quite big. We are risking 59 pips on this swing trade. But the size of the bearish candle indicates a big move. So we take this 5.9% risk to our account equity.
The next day we find that EURUSD has indeed fallen close to 200 pips. So we were right in taking the risk. We don’t close the trade. Why?? Look at the daily chart. The day closed with a big bearish daily candle which indicates the start of a strong downtrend. So we don’t close the trade. The trade continues for one more day. We open the second position just below the second arrow in the above EURUSD H4 screenshot.
The entry price is 1.13651 and we move the stop loss to 1.13900. So the first position is in a profit of 51 pips and is covering the risk of 25 pips for the second position. From now on this trade is risk free. ECB President Mario Draghi announces start of QE2 which makes EURUSD fall 300 pips. Looking at the daily chart we know downtrend is pretty strong. So we don’t close the trade.
EURUSD retraces and gains around 100 pips. We again open a sell position just below the red arrow in the above screenshot. Our entry is 1.10658 at the close of the H4 candle. We move the stop loss to 1.1100. The risk is 35 pips which is being covered by the 2 previous positions that are now in a profit of 341 pips and 265 pips. So the trade is now totally risk free and even if the stop loss gets hit, we are going to make 606 pips.
We keep the swing trade open and open 2 more short positions. One at 1.10213 and move the stop loss to 1.10555. EURUSD falls more. We open another short position at 1.08778 and move the stop loss to 1.08960. We close all the positions at 1.07366.
So the first position made a profit of 705 pips. The second position made 629 pips. The third position made 329. Fourth position made 285 and the fifth position made 141. The swing trade made a total of 2,089 pips in 18 days. Suppose we had $1000 in our account and we had traded with 0.1 lot. We would have made $2,089 profit and the return would have been 208% in 18 days.