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com Real Trades, Real Trading Advice

The First
Touch
Trade

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The first touch trade is a trade I use after a very strong move. The First Touch has five
important components, each of these components should be in place for a valid First Touch
Trade.

1. A Very Clear Zone is Present

2. The Market Trades Far Beyond this Zone

3. The Market Comes Back to Touch this Zone

4. The Market Prints a Trigger Candlestick on the First Re-touch

5. The Market Trades Beyond this Trigger Candlestick

I will look at each of these components of the Fist Touch trade, with chart examples.

A Very Clear Zone is Present

Here the NZD/JPY is showing a clear support/resistance zone at 64.70 - there have been
several touches on this zone from below (resistance, indicated by red arrows) and several
touches from above (support, indicated by blue arrows).

Thus, we have the first component - a very clear zone is defined on the chart.

The zone is the first critical piece for the First Touch trade. The zone must be a well-defined
zone. This zone should jump out - like a gymnast on one too many Red Bulls. It should be an

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

obvious zone. If there are any questions about the clarity of the zone or the clean touches on
the zone, the zone is not good enough for the First Touch trade.

Clarity of the Zone

A clean zone will have several touches that make identifying the zone easy. The line chart
should confirm these zones.

The touches on the 64.70 zone are exceptionally clear on the NZD/JPY daily chart. This
would certainly qualify as a zone with clarity.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Clean Touches

There are several very nice, clean touches on the zone. Note that the market never closes on
the other side of the zone during the touches in the chart below.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Trades Far Beyond the Zone

The defining feature of the First Touch trade is that the market blasts through the zone. The
move is often violent and punctuated by large candlesticks. The market completely falls
through the 64.70 zone on the daily NZD/JPY chart.

Notice the candlesticks below the zone are very large, suggesting considerable momentum is
behind this move. Some traders may feel as though the market has already made the strong
move, and the trade opportunity has passed. This is not the case. The first touch is a great
opportunity to trade the markets after such a move has occurred.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Comes Back to Touch the Zone

The defining feature of the first touch trade is the re-touch. The re-touch occurs when the
market comes back to the zone. In the chart below, the CHF/JPY daily chart, after spending
more than 20 days below the 64.70 zone, the market returns to the 64.70 zone.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

A Trigger Candlestick on the First Re-touch

Once the market returns to the zone, a trigger candle is needed to initiate the trade. The daily
NZD/JPY prints a very nice long-tailed candlestick on the zone, the first time the market has
reached this price level since falling through the zone. The important thing about the trigger
candle is that it is a bearish candle (for sell trades, for those buy setups the candle should
obviously be a bullish candle). This candle is clearly a bearish candle.

Note that while many traders may consider the long-tailed candle on the zone a trigger
candle, some traders may decide to wait until the next candle prints - as this candle is more
clearly a bearish candle, with a close near the low of the candle.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Trades Beyond the Trigger Candlestick

The entry for the trade is 5 pips lower than the low of the trigger candlestick. Using a sell
stop below the low of the trigger candle ensures that the market must trade in the expected
direction before the trade is initiated.

In this case, the candle after the trigger candle pushes through the sell price and the trade is
triggered.

Here the market trades lower than the trigger candle, triggering the trade.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The stop loss is placed above the trigger candle.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Exiting the First Touch Trade

Many different exits may be applied to the First Touch trade, but one simple exit is to target
the nearest clump of candlestick lows for a sell trade (obviously, for buy trades a group of
candlestick highs will work as a target). In this example the market reaches the target in 8
candles, for an overall profit of 382 pips.

The risk on this trade was 106 pips, making the reward to risk ratio is more than 3:1 for this
trade.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Another Example
A new market example may best illustrate the other type of First Touch trade (a buy trade).

For this trade we will take a look at the EUR/USD 4-hour chart.

A Very Clear Zone is Present

The zone at 1.4023 on the 4-hour EUR/USD chart is clear. There have been three recent
touches as resistance on this zone. The red arrows mark these touches.

This is a very clear zone is on this chart.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Clarity of the Zone

The line chart shows the clarity of this zone at 1.4023 - the market never closed above this
zone, but instead has come very close to the zone three times. The line chart should confirm
the clarity of the zone.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Clean Touches

The touches on the 1.4023 zone are very clean. “Clean” touches are those that respect the
zone.

The market never trades higher than the zone during these three touches. The first touch
(red arrow) is on the zone. The second touch (blue arrow) is slightly below the zone, but this
is still a brush with the zone. The third touch (green arrow) is another near miss, a higher
touch than the second touch, so it still counts as a touch. Note how each of these touches
respect the zone and never trade higher than the zone.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Trades Far Beyond the Zone

The defining feature of the First Touch trade is that the market blasts through the zone. The
move is often violent and punctuated by large candlesticks. The market completely jumps
beyond the 1.4023 zone on the 4-hour EUR/USD chart.

Notice how the market does not retrace, all candlesticks are bullish candlesticks after the
breakout. This suggests a strong breakout, and an ideal candidate for the First Touch trade.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Comes Back to Touch the Zone

After the market traded over 200 pips above the zone at 1.4023, the market starts to get
weak. A few close misses suggests that the market is ready to touch the 1.4023 zone.

The market has not touched the zone yet, so we do not see a trigger candlestick.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

A Trigger Candlestick on the First Re-touch

The First Touch trade is triggered once a trigger candlestick prints on the chart. For this
bullish First Touch trade the obvious trigger candlestick is the long-tailed candlestick on the
zone, the first candlestick to touch the zone again.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Note that while many traders may consider the long-tailed candle on the zone a trigger
candle, other traders may not have confidence in this candlestick, and may wait for a
stronger bullish candle such as the candle some traders may decide to wait until the next
candle prints - as this candle is more clearly a bearish candle, with a close near the low of the
candle.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The Market Trades Beyond the Trigger Candlestick

The entry for the trade is 5 pips higher than the high of the trigger candlestick. Using a buy
stop for this trade entry means the market has to first trade in the expected direction before
the trade is triggered.

Here on the EUR/USD 4-hour chart, the candle after the trigger candle trades higher than
the buy price and the trade is triggered.

The market trades higher than the trigger candle, so the trade is initiated.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

The stop loss is placed below the low of the trigger candle.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Exiting the First Touch Trade

A simple way to exit this trade is to target the recent candlestick highs. This trade bags 137
pips by exiting at the recent highs. The stoploss is below the trigger candlestick, 42 pips
away, so the reward to risk ratio is better than 3:1 for this trade.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.
[Link] Real Trades, Real Trading Advice

Summary of the First Touch Trade

The First Touch Trade is a great trade for capturing profits after a strong breakout in the
markets. The following characteristics summarize this trading strategy:

1. A Very Clear Zone is Required

2. The Market Must Breakout Beyond this Zone

3. The Market Touches this Zone Briefly

4. The Market Prints a Trigger Candlestick on the Re-touch

5. The Market Trades Beyond the Trigger Candlestick

6. The Trade is Exited at Recent Candlestick Highs (Buy Trades) or Lows (Sell Trades)

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can
work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment
objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign
exchange trading, and seek advice from an independent financial advisor if you have any doubts.