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How To Trade GBP Pairs In Forex - SLFX Trading
Trading the GBP pairs comes with extreme caution amongst most Forex traders. The reason being is because most they move in a bigger range of pips even in short spurt movements. Traders who use stop loss may have to use generous stop losses and even that comes with fear from traders. The biggest question is, should trading the GBP pairs come with caution or fear? I believe not.
A lot of traders rely on fundamental analysis to guide them into trades, although they are reading headlines most of the time. Technical analysis, or chart reading, will more than likely put traders in the trade before news comes out so that should take a load off of many traders shoulders. I'm not saying that fundamentals do not work. I'm simply stating that technical analysis will have a higher chance of giving you the entry before fundamentals release.
For example, I've heard traders are staying away from the GBP pairs because of Brexit. To me, that is bizarre. Anticipating a move that may or may not happen because of rumors or news plays the trader's emotions and the big banks now that. Most traders are missing out on amazing movements due to fear or losing money or being on the wrong side of a trade.
Look at these chart example below.
Looking at the pictures above, it is clear to see that all 3 GBP pairs were in. consolidation channel. The best trade would have come from the top of the trend line, in anticipation of the pattern being broken. This is before any fundamental news was release. The Ghost Bars , which is a Trading View tool, shows where and what I anticipate the pairs to do.
You may be asking why am I showing you this?
I'm showing you this to expose GBP pairs are best to trade in bigger movements. Its great if you can pull a quick 50-100 pips out of the market, but if these pairs want to give you an easy 200-1000 pips within a month or so, I say let it. You'll find the best timeframe to analyze these pairs is per the daily time frame and the best entries are on the daily and 4 hour time frame. You don't want to shuffle too much with timeframes This best helps avoid candle noise.
The GBP pairs love patterns such as channels. If you can trade the channel and ride the trend you are golden for success with these pairs.
Have you noticed I'm not saying anything about relating it to fundamental analysis? I think its evident that it's not needed. If you are a news junkie, then by all means have at it. In hindsight and with a bit of backtesting, I'm sure you will find you are better off.
Lets recap
GBP pairs create patterns per the higher time frames such as the 4 hour and daily time frame. It's best to trade these pairs with trend and anticipate their bigger movements especially to avoid being stopped out by wicks.
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