GBP/USD Cable Trade

Entry Logic

• Entry triggers on a bounce from the 1.2500 or 1.3000 psychological level.
• Confirmation requires a pin bar or a bullish engulfing candle on the 1-hour chart.
• Timeframe is the 1-hour chart.
• Location is a key psychological support/resistance level.
• Market condition can be either trending or ranging.

Exit Logic

• Profit target is 100 pips.
• Scale out 50% of the position at 50 pips.
• Trailing stop is a 50-pip trailing stop.
• Exit on signal failure if the price closes below the psychological level.
• Exit on an opposite signal from a bearish engulfing candle at a resistance level.
• Exit on time expiration after 24 hours.
• Exit on momentum loss if the price stalls for more than 4 hours.

Stop Loss Structure

• Hard stop is placed 30 pips below the entry candle's low.
• No soft stop is used.
• Maximum dollar loss is 1.5% of account equity.
• Maximum percent loss is 1.5% of account equity.
• Structural stop is placed below the psychological level.

Risk Management Framework

• Risk per trade is 1% of the account.
• Maximum daily loss limit is 3% of the account.
• Maximum weekly loss limit is 7% of the account.
• Maximum drawdown allowed is 20%.
• Risk-reward ratio requirement is a minimum of 1:2.

Position Sizing Model

• Sizing is based on a fixed fractional model (1% of account per trade).
• No volatility adjustment is used.
• Conviction sizing is not used.
• No scaling in.
• Scale out 50% at the first target.

Trade Filtering

• Avoid trading around major UK news releases.
• Requires a clear reaction to the psychological level.
• Instrument is GBP/USD.
• Can be traded at any time.
• Avoid trading in very low-volatility environments.

Context Framework

• Trend direction is not a primary factor, but trading with the trend is preferred.
• Price action around the psychological level is the main focus.
• Moving averages are not used.
• Location is a key support/resistance level.
• Higher timeframe (daily) should show the significance of the psychological level.

Trade Management Rules

• Move stop to breakeven after the first profit target is hit.
• Scale out at the first profit target.
• Do not add to the position.
• Be patient and let the trade develop.

Time Rules

• Optimal trading window is during the London and New York sessions.
• Avoid trading during the Asian session due to lower volatility.
• GBP/USD is most active during the London session.

Setup Classification

• A+ setup: Bounce from a major psychological level with strong confirmation and high volume.
• A setup: Bounce from a minor psychological level with good confirmation.
• B setup: Bounce with weak confirmation.
• C setup: Fading a breakout of a psychological level.

Market Selection Criteria

• Instrument is GBP/USD.
• Requires high liquidity.
• Volatility should be moderate to high.

Statistical Edge Metrics

• Expected win rate is 40%.
• Average win is 2.5R.
• Average loss is 1R.
• Profit factor is 1.6.
• Expectancy per trade is +0.4R.

Failure Conditions

• Strategy fails when a psychological level is decisively broken.
• Avoid trading when there is strong momentum against your position.

Psychological Rules

• Have confidence in the psychological levels.
• Do not get shaken out by small fluctuations around the level.

Advanced Components

• No advanced filters are used.
• The focus is on pure price action at key levels.
• Multi-timeframe alignment with the daily chart is helpful.

Location

• Strongest at major psychological levels (e.g., 1.2000, 1.2500, 1.3000).
• Weakest at minor psychological levels.
• The strength of the level determines the probability of success.