GBPUSD is a pair that we love to trade. It provides a great trades. In the beginning we lost a lot trading this pair. But when we analyzed the chart patterns, we discovered a chart pattern that works very well for this pair as well as other pairs. In this post we are going to analyze a swing trade that made 100% return in 2 days. Take a look at the following screenshot.
Take a look at the first red arrow in the above screenshot. Four H4 candles are finding strong resistance at 1.51376. When GBPUSD makes a pattern like this with 3-5 H4 candles that are short and find strong resistance or support at a certain price level we know for sure that price is going to make a big breakout. So we make an entry just above the short H4 candle that forms on the red line in the above screenshot. The entry price is 1.51739 and the stop loss is 1.51539. So the risk for this trade is 20 pips. Suppose we have $1000 in our account. We open the trade with 0.1 lot which gives us a risk level of 2%. So if the stop loss is hit we lose $20.
We let the trade continue and open another position just above the second red arrow. The entry is 1.52225 and the we move the stop loss to 1.52125. Our risk is only 10 pips this time. We open the second position with 0.2 lots so our risk is 20 pips. Even if the stop loss is hit, since the first position is in profit of 39 pips we will be in profit of 19 pips. So we increase the lots to 0.3 which gives us the risk of 3% or 30 pips. Now if the stop loss gets hit we will still be in profit of 9 pips. Trading is all about taking risks that have very low probability of success. In this case we are pretty sure looking at the pattern that it is an inside bar pattern and a continuation pattern. We close the trade just above the third red arrow at 1.53250.
First position made a profit of145 pips or $145 and the second position made a profit of 309 pips or $309. So the net profit was $454. Now if we had been comfortable with a risk of 4%, we could have opened the first position with 0.2 lots. In that case first position would have made a profit of 290 pips or $290. So the total profit would have been $590 or 59%.