From strategically background talk straight to the point. When we pick EURJPY cross we actually don’t have to open EURJPY. We get much the same effect if we open EURUSD and at the same time USDJPY. If USD cancels out the result is clear. The sum of EURUSD and USDJPY will be almost the same as EURJPY with small short term deviations. This is the first step. If you look a little bit deeper, you will quickly realise that EURUSD is basically composed of EURGBP and GBPUSD, while USDJPY is a result of USDCHF and CHFJPY. This is the second step.

The third logical step in this strategy is after generating Buy to Open (BTO) signal in EURJPY cross to open long positions in EURGBP, GBPUSD, USDCHF, and CHFJPY.

Because EURGBP and GBPUSD will tend to diverge as well as USDCHF and CHFJPY we have as our fourth logical step to enter breathable but tight stop loss on all the constituent crosses. With a little help from volatility (which at the times of crises abounds), we will have a strong divergence run in all crosses, two will be taken out at stop loss (and continue falling without us) and the other two will continue rising (with us on board). Soon we are able to move stop loss to zero position, which we define as entire trade without a loss.

Our fifth logical step in said strategy is the way we manage a stop loss.

This is not too much text but information contained herein may be revolutionary. Even if it looks a small bite chew on it until we explain how we manage a stop loss and why we did not find trailing stop to be satisfactory.