EURAUD Looking for 150pips When you're taking a trade on EUR/AUD with a 150-pip profit target and a 40-pip stop loss, you're aiming for a trade setup that has a reward-to-risk ratio of 3.75:1. This means for every pip you risk (40 pips), you're potentially earning 3.75 times that amount (150 pips).
Here's a breakdown of the thought process:
1. Setting the Profit Target (150 Pips)
The 150-pip target likely corresponds to a significant level on the chart, such as a previous support or resistance zone, a Fibonacci extension level, or a major pivot point.
This target should be realistic based on the current volatility and historical price action of EUR/AUD.
Check for daily average range: If EUR/AUD tends to move around 100-150 pips per day, this makes the target more achievable within a reasonable time frame.
2. Defining the Stop Loss (40 Pips)
A 40-pip stop loss should ideally be placed below/above a significant technical level, such as:
Recent swing highs/lows.
A moving average.
A key Fibonacci retracement level.
The stop should protect you from a potential market reversal but not be so tight that normal market noise would trigger it.
It’s important to make sure that placing the stop here still keeps you below a key invalidation level, meaning if the stop is hit, your initial analysis was incorrect.
