In a previous post to illustrate the possible use of the ADX, the USDCHF was used as an example. You can view the previous post here.

Here’s what happened after the post was published.

1-2-3 Chart Pattern

I’ve marked out the 1-2-3 chart pattern on the above chart. The trade entry would have been placed on the break of support level labeled “2″.

The initial stop loss level would then have been placed above the point of potential resistance, which is point “3″.

After determining your stop loss, where would you potentially see the USDCHF heading?

In the following chart, I’ve shown potential price targets for where the market might be headed. There are 2 potential Fibonacci Expansion Price targets, the 100.0 and 161.8. On the same chart, I’ve marked out a potential support level in blue.

Conclusion

The final result of a trade like this may end up profitable for one trader, while a loss for another. This is due to the different type of trade management techniques that a trader uses. For example, trader A might employ a scaling out approach to capture some profits. Trader B, on the other hand, may use an “All In All Out” approach with a specific price target.

Depending on how the market moves after the trade is opened, Trader A or Trader B will have different trade results. Again, this shows how important a total trading system is with regards to the final result of your trading.

Therefore, it’s worth your while to learn not only entry strategies, but trade management strategies and money management as well.