The British Pound — Japanese Yen currency pair is a volatile offering that presents traders with potentially large moves in price relative to many other pairings. Take, for instance, the initial throws of the Financial Collapse in This volatility can be a good thing, or it can be a very bad thing; depending on how you trade.
Exhaustive research was performed by DailyFX Quantitative Strategist David Rodriguez, examining more than 12 million trades placed by live traders. The results of the research are shocking, and what was found was that the Number One Mistake that FX Traders Make often revolves around risk-reward ratios; that is, how much is lost on losing trades against how much is profited on winning trades.
Traders win, on average, 52 pips on GBPJPY trades when they are right; but when they are wrong, they lose a monstrous pips.
The first point of emphasis is that given the above points, trading in GBPJPY should always entail a protective stop-loss order.
Lack of doing so exposes the trader to significant risks as the pair may trend for an extended period of time. Due to this volatile nature, and given the fact that the pair could trade with very wide swings in either direction, breakouts can be an attractive approach when trading GBPJPY.
This will allow traders to maximize profits on the large swings when they are right; while also allowing them to cut their losses short as the big swings move against them.
Its staying power as a popular mechanism for initiating trades has continued, as the system is still widely in use today. Ichimoku is often used as a trend-following system, but with a slight modification can be used to trade in breakout-style scenarios. When price breaks through either side of the cloud, the trader can often look to trade breakouts by placing a trade in that direction. A History of US Debt. Traits of Successful Traders. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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