***Sample Trade*** [TW] 4-29-2011 - GBP/USD (Long) by Forex Ninja

[B][U]Take note that this is NOT a real trade. This is purely for illustration purposes only.

[B]GBP/USD, 1-hour [/B]

[B]Long or Short:[/B] LONG

[B]Entry Point:[/B] 1.6600

[B]Stop Loss:[/B] 1.6530

[B]Profit Target/s:[/B] 1.6750

[B]Reward-to-risk Ratio:[/B] A little over 2:1.

[B]Risk percentage:[/B]

I’m willing to risk 2% of my account since I’m going with the trend. I’ll open 2 positions at 1.6600 and risk 1% on each.

[B]Indicators used:[/B] RSI (set to 9)

[B]Trade Rationale:[/B]

Fundamentally, it seems the markets weren’t too happy with the Fed’s decision to end QE2 on schedule in June. The fact that it plans to reinvest payments from principal securities means that the Fed still has lingering concerns about the economic recovery and that it doesn’t want to pull the life support plug just yet. With that said, I believe sentiment will remain bearish for the dollar, at least for the next few days.

On the technical side of things, I’m expecting the pair to retrace some of its gains back to the 50% Fibonacci level and find support at the previous resistance area. By then I’m anticipating the RSI to indicate that the pair is already oversold. That’s when I’ll pull the trigger, baby!

[B]Trade Adjustments:[/B]

I’m looking to take profit on my first position at the pair’s most recent high at 1.6750. As for my second position, I’m gonna let it ride the trend like the wind. Yee-haw! But I’ll just close it manually if the pair starts to show signs of reversal (candlesticks, RSI). Also, I have no plans of holding this trade over the weekend so I will close it manually by Friday night.