EEURJPY GOING FOR 100PIPSIn a bearish setup for EUR/JPY, with stop losses at 50 and 100 pips and targeting the next low, here's how the trade would work:
Trade Setup (Bearish Trend):
Entry: You are expecting the market to go lower, meaning you are selling EUR/JPY. You might enter after observing price action that indicates a downtrend (e.g., a bearish candlestick pattern, a break of support, or rejection from a resistance level).
Stop Loss:
50 Pips Stop Loss: This is a tighter stop loss, meaning if the trade goes against you by 50 pips, you will exit the trade. It protects you from a small adverse move but is more likely to get hit if the market is volatile or experiencing pullbacks before continuing downward.
100 Pips Stop Loss: This is a looser stop loss, allowing more room for the trade to breathe, but it also exposes you to more risk in case the market reverses against your position.
Take Profit (Targeting the Next Low):
Your target for a bearish trade is the next significant low in the market structure. This low could be determined from previous price action, such as a support level or a swing low. You could be aiming for a major level of demand or the bottom of a consolidation range.
Risk-to-Reward:
Stop Loss of 50 Pips: A 50-pip stop loss means you are taking less risk per trade. With a target of, say, 150 pips (a 3:1 risk-to-reward ratio), this could give you a more attractive risk-to-reward setup, but you need to be more precise in your entry to avoid hitting the stop loss due to market noise.
Stop Loss of 100 Pips: A wider stop loss might result in a risk-to-reward ratio of 1:2 or 1:3, depending on how large your target is. This allows for some volatility but increases your risk if the market turns against you.
