Stops should be called Shields

NZD/JPY 

How Stops Saved Me Once Again

Here are some of the parameters for this NZD/JPY trade; it was a long position

I risked 15 to get a reward of 40 but as it turned out my risks would have expanded by almost double or triple if I kept the long position or added to it. 

My stop was located at the red line at 74.99, and my entry was at 75.15.

• I put in my orders with stops first, entries second, and targets third
• I tend to go with the flow, unless there is an extreme range imbalance which should be exploited
• My perceptions were not in tune with the tape perhaps
• Stops are Fundamental to trading

The logic for my entry was that I believe it was basing near 75 and it was coming into a level at support, basically buy at the bottom of the range (it was like thin ice)

My view of the imbalance was that the buyers would come in and defend 75 but as it turned out there was enough of a rush to bring it down to 74.544 and flush it down 50 pips greater than my expectations

The Yen was very strong like we have been saying, but maybe the most important aspect of this was all the money I would have lost if I kept the trade in and started nursing it.  

I always like to show how deep the problems would have been [the green shaded zone would have been my punishment for keeping a long position during a massive liquidation like this]

The good news is that it is starting to show some signs of improvement and Yen related pairs are good to watch now should the Yen begin to give back some of its gains.