GBPUSD is a currency pair that we love to trade. GBPUSD moves very fast. If you cannot handle its fast moves, you should avoid trading this pair. But if you can master how to harness its quick moves you are going to become a very rich trader in a few months. Just make sure that you keep the risk under control when you trade this pair. Take a look at the following GBPUSD H1 screenshot.
As you can see in the above screenshot, first there was a strong down move when the GBP CPI y/y news release was not good. CPI y/y indicated disinflation which drove GBPUSD down pretty strongly. You can see a strong bearish white candle in the above screenshot just below the red arrow. This is the entry signal.
We make an entry at 1.53666 just at the close of the H1 candle. We always open or close a trade at the close of H1 candle. Don’t make the mistake of opening a trade when the H1 candle has not closed as it can change shape in just a few minutes. The stop loss is 1.53900. So the risk is 24 pips. Suppose we have $1000 in our account. We would open this trade with 0.1 lot. This will give us the risk of 2.4%.
You can see the highlighted area in the above screenshot. This is the close signal and a new buy entry signals. We closed the sell trade at 1.52155. The profit for this sell trade was 150 pips or $150. We open a new buy trade at 1.52244 with 0.1 lot and place the stop loss at 1.52000. Our risk is 2.4% once again. We open another position at 1.52483 and love the stop loss to 1.52342. The risk is 14 pips. This time we use 0.2 lot. If the stop loss gets hit, the first position closes with a profit of 19 pips while the second position closes with a loss of 28 pips. So we end up with a risk of 9 pips which translates into 1%. So the total risk for this trade is now less than 1%.
Today was USD Retail Sales m/m news release. USD retail sales data showed a very slight increase in the retail sales which was considered disinflationary for US economy. USD got crushed by this week report and as a consequence you can see GBPUSD rose up almost 200 pips. We close the trade at the last red arrow at 1.55000. The profit from first position is 285 pips or $285. The profit from second position is 332 pips or $332. So the total profit for the buy trade is $617. The profit from the first sell trade was $150. So the total profit in 2 days is $767 or 76%.