CADJPY 31/08/10

Entry: 79.539

Target Profit: 81.480

Stop Loss: 78.10

Trailing Stop: 10Pips 

Potential Loss: 143.9Pips

Potential Profit: 195 Pips

Reason for Entry: Technical  - 3rd Bottom ( Since 12 April 2009). 

Reason for Stop Loss - risking 0.47% of the account (143pips estimated to be $14.30>> $14.30/3000*100)

Reason for Target Profit - Next Resistance line 81.10

Reason for Trailing Stop: It is because CADJPY does not fluctuate as much as other major currencies such as EURUSD, USDCAD.

Result:
Stopped at: 80.314 (1/09/10)
Profit realised: 77 Pips


Thoughts: 
(3/09/10) I was feeling a bit doubtful with this setup. It is because the overall trend is downward and thus there is more likely that the CADJPY will go down further. However, at that time when I setup the trade, I am more bias  that the price will increase: (1) in weekly chart it is going to hit the 3rd -4th bottom since 12 Apr 09. (2) JPY is still in the deflationary spiral. The country is focusing on exporting and thus has to keep the currency down. What I am afraid here is that  when will the Japanese government make the necessary impact on its currency. This is a pretty big gamble. 


BUT DO I THINK WORTH IT? I am slightly more to say no. It is because of the risk-reward ratio is almost 1-1. If it is 1:2 or 1:5, NO DOUBT I WOULD SAY IT IS WORTH IT.


Would I do the trade again? I would if the risk-reward ratio is 1:2.

Lesson Learned:

1) I need to increase the reward when I am against the market trend. "The trend is your friend".
2) Do not enter the market straight away - use pending order - be patient.