This 4-hour NZD/CAD chart shows a strong uptrend and an “ABC” move in early April. Point B was at the .7691 level while point C was at the .7522 level.
As the market moves back up towards point B, the trader enters a buy entry order at the .7692 level, one pip above point B. An initial protective sell stop is also placed at the .7521 level, which is one pip below the point C low of .7522. This represents a risk of 171 pips. Since the NZD/CAD is worth$1.03 a pip for every 10K position, this represents a total risk of just over $176. So if a trader had a $5,000 account balance, they could only open one up 10K lot since their maximum risk would be $250 (5% of $5,000). A limit order to take profit is also set at twice that initial risk of 171 pips. That would be a total of 342 pips which means a target of .8034 level. You can see that this level was reached in May resulting in a profitable trade.
