Picking Targets
Targets vary depending on the pair you are trading. You cannot have the same target on GBP/JPY that you have on EUR/USD, because EUR/USD moves only about ½ as much. A little trick I have learned is to figure out the average daily range (ADR) of the pair and divide it by 4. This gives you an idea on what you should target on a normal S+R line trade. You will probably need to tweak the target slightly over time, but dividing the ADR by 4 gives you a general idea. To save you time I have figured out the ADR for you.GBP/JPY ADR = 281 pips
281 / 4 = 70
GBP/JPY S+R line target = 70 pips
GBP/USD ADR = 172 pips
172 / 4 = 43
GBP/USD S+R line target = 45 pips
I’m sure you get the idea. I will let you figure out the rest of the targets for yourself.
USD/CHF ADR = 111 pips
EUR/JPY ADR = 183 pips
USD/CAD ADR = 117 pips
AUD/USD ADR = 111 pips
EUR/USD ADR = 127 pips
These are all the ADR’s I have figured out. If you want to trade any other pairs you will have to figure it out for yourself. Remember, I only trade GBP/JPY, so I cannot give you more accurate targets on other pairs. This is the best way to get a general idea. All you have to do now is tweak the target based on your observations.
Refining Targets
Once you have picked your target for a pair you apply it to your trades on that pair. If after some time you notice that the target is often not hit you lessen it. So for example above with GBP/USD we figure out based on the ADR being divided by 4 that we should target 45 pips. If when using that target you notice it is often not reached you simply lessen the target to 40 or 35 pips. If instead your target is hit and it often moves beyond it you could increase your target to 50 or 55 pips.Keep in mind that this usually takes months of observations I do not change targets based on two or three trades. My targets on GBP/JPY have been refined by 3 years of data.
