USDCAD seems to be at the end of wave 5 and a correction should take place. Being as this looks like the end of ((Y)) and soon to be the start of ((X)) which would likely go to 1.295 area, then taking a trade on this one I am breaking down to an Risk Reward of:
Current Price: $1.32
Forecast end of next wave: $1.295
Difference: $0.0250 or in other words 250 pips
So being as I want to take a minimum reward to risk of 4 to 1, however 5 to 1 is better, then my max stop loss is going to be 50 pips or $0.0050 which would place my stop loss at 1.3250.
And I am thinking that the price will likely rise to $1.3211, so if I get in at that price my stop loss can then be put at $1.3261 which gives the trade a little more room in case of a spike.
As I am getting ready to enter this trade I actually kinda want to see a spike before entering into the trade anyway. And if I want to really be fancy I might set a higher entry point and see if I catch a spike near the top of the spike.
So the next part is how much to put on the line on this trade. And I have heard that 2% of capital should be the max amount to risk on any one trade. So this means that on a $1000 balance I should only risk $20 and look forward to a potential return of $100 on this one as I am calculating it as a 5 to 1.
Really I need to consider what the stop loss should be based on the wave count and previous support/resistance and possible spikes.
So I have my trade worked out for the numbers and am likely going to jump in at $1.3211
Current Price: $1.32
Forecast end of next wave: $1.295
Difference: $0.0250 or in other words 250 pips
So being as I want to take a minimum reward to risk of 4 to 1, however 5 to 1 is better, then my max stop loss is going to be 50 pips or $0.0050 which would place my stop loss at 1.3250.
And I am thinking that the price will likely rise to $1.3211, so if I get in at that price my stop loss can then be put at $1.3261 which gives the trade a little more room in case of a spike.
As I am getting ready to enter this trade I actually kinda want to see a spike before entering into the trade anyway. And if I want to really be fancy I might set a higher entry point and see if I catch a spike near the top of the spike.
So the next part is how much to put on the line on this trade. And I have heard that 2% of capital should be the max amount to risk on any one trade. So this means that on a $1000 balance I should only risk $20 and look forward to a potential return of $100 on this one as I am calculating it as a 5 to 1.
Really I need to consider what the stop loss should be based on the wave count and previous support/resistance and possible spikes.
So I have my trade worked out for the numbers and am likely going to jump in at $1.3211