Taking Profit Friday and Protecting Trades

Per Yesterday's GBP/JPY trade, I'm taking a few contracts off the table to lock in some profit. The important part of taking profit, especially while leaving a portion of your base position on, is to try to lock in more profit than you initially risked. The good ol' risk/reward ratio in effect.


I was willing to risk about 150 pips on my initial trade. I took half my position off the table this past hour, locking in 188 pips (per chart above). Furthermore, I've adjusted my stop-loss to below my initial short, around 158.53, in order to protect the remainder of this trade, as I'm not as willing to maintain my risk on the "hedged" portion of my trade strategy. By placing my stop below my initial short, I'm automatically locking in a minimum profit of about 50 pips on the remaining lots of my trade. Keep in mind, this is not my preferred direction against the Yen, as I noted clearly in yesterday's piece. I always want to be short the Yen (long EUR/JPY, GBP/JPY, USD/JPY, etc).

I'm still watching the EUR/JPY and USD/JPY for entry points in the long and interest-rate favorable direction. There was a point around 3:00-4:00 pm EST where I could make a case to have entered at least an initial position, but I did not see a favorable risk/reward ration for an appropriate trade.

In the old days, something silly like risk/reward would never have stopped me. Now, I must stay disciplined and trade ONLY when it is favorable to do so. I seriously doubt I will enter this side of my strategy this week.

Be wary of entering trades on Fridays, as I have given back perfectly productive weekly gains all because the Market sometimes goes against all rhyme, reason and sanity on Fridays.