GBP CPI Y/Y News Trading Made 350 Pips With A Risk Of 3.2% In 4 Hours

GBP CPI Y/Y is an important news release. Always expect GBP pairs like GBPUSD, GBPJPY and GBPNZD to move big time when this economic news is released. In this post we are going to analyze the recent GBPUSD trade made based on GBP CPI Y/Y news release. You must be familiar with CPI. CPI stands for Consumer Price Index. The Consumers Price Index (CPI) measures the rate of price change of goods and services purchased by households. CPI is also commonly known as the inflation in the economy. Inflation affects the households as they have to pay more when the inflation is on the rise in the economy. When inflation rises, expect the central bank to increase interest rate in order to dampen the inflation. But we don’t need to know any of these things. We just need to look at the chart and trade accordingly. Whatever is happening is being reflected in realtime on the charts. Take a look at the following chart of GBPUSD H1.

GBPUSD Chart

Red arrow shows the time when GBP CPI Y/Y is about to be released. So we open a trade using GBPUSD M15 chart. This gives us a low risk entry. We enter small and test the waters. When we become more than 90% confident that price is going to move in the direction that we have anticipated, we open more positions.

GBPUSD Chart

So our entry is 1.55700 and the stop loss is 1.55600. Our risk is only 10 pips. At the close of the big bullish engulfing H1 candle we open one more position at 1.55866. Our risk is now 10+26=36 pips. The stop loss is the same. On the close of the M30 candle just a minute after the news release we open one more position and move the stop loss to 1.55700 making the first position risk free.  After 3 hours we close the 3 positions at 1.57040. So we made 118+118+134=350 pips.

Suppose we had $1000 in our account. We should have opened the first position with 0.1 lot. 10 pips stop loss means our risk is only $10. When we move the stop loss to breakeven for the first position, the risk for the second position become $16 and the risk for the third position is also $16. So our total risk is only $32 which comes out to be 3.2%. Even if the price had whipsawed we would have only lost $32. Just make sure you always manage your risk before you start opening new positions. Risk management is of utmost importance. With practice you will become proficient in handling the risk well. So we made a profit of $350 or a return of 35% from just one trade.

0 Comments