The GPY 4H Strategy Trading System is a forex trading strategy that applies to the GBPJPY pair on the H4 timeframe.
We know that every currency pair has a unique characteristic that is important to understand for a trader. In this way, the GPY 4H Strategy Trading System is the result of long research and practice that works well in the GBPJPY pair only.
The best part of this trading strategy is that it does not require to take several trades in a day rather wait for a specific time and price formation once a day.
Elements of GPY 4H Strategy Trading System
The timing is essential for this trading strategy as the name says, it applies to H4 candles only. Besides, the concept of the candlestick pattern is also used here.
If the price is moving upward, any bullish candle provides a further bullish indication. On the other hand, if a candle closes bearish below the low of the previous candle it will indicate an upcoming bearish pressure.
However, the most significant part of this trading strategy is the MACD (Moving Average Convergence and Divergence).
In MACD, there is an exponential moving average and Histogram. If the Histogram moves below the zero lines, it will provide a bearish sentiment in the price. On the other hand, if the Histogram moves above the zero lines, it will indicate a bullish possibility.
On the other hand, the exponential moving average in the MACD moves with the price by creating a higher and lower low. Moreover, the EMA provides an indication of possible market reversal by creating divergence with the price. However, in the GPY 4H Strategy Trading System, we will focus on the MACD histogram mostly.
In the image below, we can see this trading strategy’s primary interface and how the MACD provided the bullish and bearish sentiment in the price.
GPY 4H Trading Strategy
GBPJPY pair is one of the most volatile pairs among the cross currency pairs that provide a decent movement in Asian and London trading sessions.
Therefore, during the Asian and London trading session, we would get better trading results. However, as it is the H4 timeframe, it can provide good trading results in other trading sessions.
Let’s have a look at conditions of buy and sell using this trading strategy:
Bullish Trade Entry
- Observe the market from the open of the 8:00 candle on the GBPJPY H4 candle.
- Enter the buy trade if the H4 candle closes bullish at that time, and the MACD Histogram moves above the zero lines.
- There is no trade if the H4 candle failed to close bullish, and MACD Histogram remains within or below the zero lines.
- There is no trade if the H4 candle failed to close bullish, and MACD Histogram is above zero lines and decreasing the length.
Bearish Trade Entry
- Observe the market from the open of the 8:00 candle on the GBPJPY H4 candle.
- Enter the sell trade if the H4 candle closes bearish at that time, and the MACD Histogram moves below the zero lines.
- There is no trade if the H4 candle fails to bearish and MACD Histogram remains within or above the zero lines.
- There is no trade if the H4 candle fails to close bearish, and MACD Histogram is below zero lines and increasing the length.
Entry
Both buy and sell entry will be after the H4 candle closes. Ensure that the candle closes, and a new candle appears as it is very risky to take trades on a running candle.
While taking an entry, you should focus on a small calculation of the Lot size. It is recommended to take not more than 2% risk per trade.
Stop Loss
The ideal stop loss is around 30 to 40 pips with an additional 5 pips buffer. As we know, the price of a currency pair is not exact in every broker. Therefore, using a buffer often helps traders to recover from unwanted stop loss hit.
However, it is always better to put the stop loss below or above an important horizontal or dynamic level.
Take Profit
The ideal take profit for this trading strategy is 100 pips or more. However, using some trade management tricks is also applicable in this scenario.
If you trade 2 standard lot, you can close 50% at 100 pips and let the profit run until there is any significant market reversal. You can observe the price every 4 hours, and any reversal with a new low or high would indicate a market reversal.
Trade Management
In every trading strategy, trade management is very important. The forex market is very volatile, where the market may reverse at any time.
- For Sell trade- If the price failed to reach 100 pips and the market starts to reverse upside with an H4 candle close above the previous candle’s opening price, we should close the trade.
- For Buy trade- If the price failed to reach 100 pips and the market starts to reverse downside with an H4 candle close below the previous candle’s opening price, we should close the trade.
This trading strategy is based on pure technical analysis that works well in every market condition. Therefore, you should focus on reading the chart carefully to match the exact condition for taking a trade.
Summary
The GPY 4H Strategy Trading System is very profitable and provides a decent movement in the GBPJPY pair due to having a lot of liquidity. Let’s have a look at the summary of this trading strategy:
- Observe the market from the open of the 8:00 candle on the GBPJPY H4 candle.
- Enter the trade only when the candlestick and MACD confirmation appears.
- Do not take a trade if the MACD Histogram moves against the trade.
- The Ideal stop loss is 30-50 pips, while the primary take profit is 100 pips.
- A strong trade management rules are required to avoid unexpected market reversal.
In the forex market, we trade on probabilities. Every indication of buy and sell is the anticipation of the upcoming price movement. Therefore, if you can add more tools to this trading strategy, it will provide better results. However, it is always recommended to keep the trading strategy simple to follow it accordingly.
