Any discussion of a currency pair ought to highlight those parameters that have the ability to stop further losses from accumulating. The question of which parameter to use in the case of the GBP/USD pair, for instance, varies depending on the trading time scale. One may either make use of price differences or the pip expression approach.
Any stop-loss parameter that one uses results in a profound effect on trading returns. Let us compare the entry ranges involved when one is trading in the GBP/USD pair. You will realize that when the entry level becomes more conservative, the maximum gains from the resulting return fail to move to the left. The greatest challenge in forex trading lies in forecasting. Every forecast signal comes with its own challenges since there are so many thresholds to be applied within such a short time.
The volatility of the foreign exchange markets is responsible for difficulties that arise when one tries to analyze the GBP/USD currency pair. Every new quantity that is introduced comes with its own specific effect. One such effect is the tight placement that results in a rather bumpy ride when it comes to returns. The long-term effect of this scenario is a change in the threshold of entering and quitting trade.
The annualized returns approach also results in a good picture of the viability of the GBP/USD pair although again problems of viability stand in the way once again. The results take time to come out but are usually very reliable. In this case, no trader selection should be made. This is because it would lead to inaccuracies when the results are being analyzed.
Previous optimization studies of the GBP/USD combination reveal an extension of the entry parameter from 0.006 to 0.009. According to the same parameters, the exit price has been seen to be as high as 0.013. According to the latter figures, the step that was used in the optimization grid was seen to change drastically since the conclusion arrived at by financial market forecasters was seen to be featureless and very weak.
[ad#downcont]According to some of the ranges derived from previous surveys, a conservative entry into the GBP/USD trade appears more favorable. This means that profitability is realized when those who trade in the pair enter into the market using a high threshold as the entry point. However, this is not the best performance that can be achieved through this approach. Many financial commentators are concerned that current studies of both the USD/CAD and EUR/USD will fail, indicating that those who trade in them have higher chances of making more profits than those who trade in the GBP/USD.
From the information gathered from different foreign exchange rates in the past, what is clear is that forecasting is the most challenging part of any trading system that requires optimization of profits. This is true both within the short-range and long-range analytical time frames. A compromise approach is often viewed as the best solution, especially for a strong pair like the GBP/ USD.