Could 'ave, Would 'ave, Should 'ave

Some of you may have noticed that when a break-out occurs in a currency pair, the price moves well beyond our Target price and you may think "ooh if I could have known, I would have left the position open for a few more pips profit" or "Drat ... I should not have closed the position ... I could have gotten a few more pips..." and so on. Personally, I like to enter a trade late to be sure that a break-out or trend is underway and I like to exit early so there are plenty of willing buyers or sellers to take the position off my hands.

Hindsight is a wonderful thing but when you place each trade, the world is uncertain and we should be grateful for small consistent wins. But the psychological nature of trading makes use remorseful when we close our trading position and then realise we could have made more profits by closing a few seconds or minutes later. This distressing "after the fact" knowledge will often make the trader wail "If I had known, I could 'ave / would 'ave /should 'ave ...".

The STAR:fx trading system places the target price relative to the entry price according to volatility: if volatility is high, the target is placed further from the entry price and if volatility is low, the target is placed nearer to the entry price such that the probability of either target being met is approximately the same and that the target is highly likely to be met.

So if there is a break-out in a currency pair leading to a sustained trend for the remainder of the day and you wish to participate in that trend, you could do one of the following:

1. When the Target Price is reached, move your stop to the target price and close the trade when the trend is exhausted;
2. When the Target Price is reached, move your stop to the target price and trail it so that the trade closes automatically on a trend reversal;

But now you have the problem of either determining when a trend is exhausted to close your trade or finding the optimal method to trail a stop so that you are not taken out of the trade prematurely. Neither of these is an easy task but we are trying to find a robust solution and will release it to you as soon as we are confidant in its performance.

Until then, consider this: if you are able to make say 50 pips a day on average (which is where our system lies) then as there are 250 trading days per year, that adds up to 12,500 pips per year and ignores the power of compounding. If each pip were worth GBP 2.00, you have a very tidy GBP 25,000 annual gain.