By "MTI" I'm referring to a trading method that says given a pull back from 38.2% - 78.6% then you can expect a reversal and continuation of the trend to a 161.8% Fibonacci Extension. Notice the green range pulled back to between 38.2% - 50% then reversed and hit its 161.8% target. Then the yellow range did the same exact thing. So based on those successes, we entered a trade to continue the upward trend and hit 161.8% target for the purple range.
When we entered the trade we didn't know where the pull back would end. We only knew we already hit the 50% retracement level at .009156. We could wait for price to break through the top of the purple range and see how far the pull back reached before reversing. This would decrease the potential profit substantially, and increase the loss risk substantially because the Stop should go under the low of the purple range. So, instead, we decided to scale in at the likely reversal levels. Since we're scaling in, we used the MJY mini-contract ($1.25/pip) rather than the full JPY contract ($12.50/pip).
The likely reversal levels are the 50% (9156), 61.8% (9150), and 78.6% (9142) Fibonacci retracements. Since we had already bounced off the 50% level we entered with a market order which was filled at .009158. Then we entered 2 contingent limit orders at .009150 and .009142.
Our target is the 161.8% Fib Extension at .009210, but as usual we shaded it by 1 pip. So the actual target is 9209 (abbreviating ".009209" as "9209").
The Stop is 1 pip below the purple range, which is the basis of this whole trade. That would be .009130.
The minimum risk is if only the 1st contract was filled. The maximum risk is if all 3 contracts are filled. The same is true for the reward. We'll skip the case of 2 contracts being filled since its between the other two cases.
RiskMin=9156-9130=26 pips
RiskMax=(9156-9130)+(9150-9130)+(9142-9130)=58
RewardMin=9209-9156=53
RewardMax=(9209-9156)+(9209-9150)+(9209-9142)=179
1 contract R:R = 53/26 = 2:1
3 contract R:R = 179/58 = 3:1
Very happy with these Reward:Risk ratios.
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