GBP Trading System
by Trader Rich
I mentioned this simple GBP/USD system a couple of weeks ago. Since then, I've been following its' progress and I've been using it live if I have time to check out the charts when I wake up in the morning. I haven't had many opportunities to do so in the last couple of weeks but I did today and I made a quick 30 pips again. These trading opportunities may not pop out on the screen if you don't perform one simple step before hand. All you need to draw are horizontal lines indicating the high and low of the GBP/USD from yesterday. This system does not require any indicators which I try to stay away from.
I've posted a picture with four trading opportunities generated by this system in the last week, all of them profitable. Let me just mention that I am still working on this to try to gauge what the optimum limit and stop/loss levels are but I'm never greedy. I always shoot for about 30 pips with a GBP/USD trade which from my experience is a very good target and not greedy whatsoever. The risk/reward on this trade is typically 1:1 but I've found from backtesting that it definitely wins more than it loses. Money management is still a quandary I face with trading the GBP/USD. It doesn't pay to be greedy and like I've said, I found that 30 pips is an optimum profit target based on my experience. But I've also found that anything tighter than a 30 pip stop is not recommended. There are other ways to go about trading this system such as using breakeven stops or multiple lots with multiple targets but it's still a work in progress and I can't really comment any further on it.
Here are the simple rules or procedures for a short trade:
- Draw horizontal lines on a 1-hour GBP/USD chart indicating low from yesterday.
- If a price candle closes below the low of yesterday you have a possible trading opportunity.
- We are now waiting for the price to reverse back into yesterday's daily range. Place an order to buy 6 pips above yesterday's low.
- Set your target at 30 pips and your stop at 30 pips.
I've circled 5 trading opportunities but the fourth is questionable because the price barely closes above yesterdays high.