Sshhh – It’s Time To Discuss The Forex Cheat Sheet
Occasionally you’ll get a ‘heads up’ in the form of a fascinating document sent to you by contacts in the industry. Some really are eye-openers, others are ‘slap on the forehead’ “why didn’t I see that?” obvious…
Positioned somewhere in the middle of those two descriptions is a document called the forex cheat sheet. The document doesn’t list a series of strategies, or offer up advice on how to ‘cheat the market’, principally it lists the crucial times to trade and expands on the reasons why.
Let’s not forget that despite algorithms driving the equities markets, replicating ‘bot trading’ is more difficult in a market as liquid as forex. Forex as an industry is still prone to human intervention and the whims of that human behaviour and as such forex is (arguably) a ‘cleaner’, more arithmetically pure market place in which to operate.
You’re probably not alone in wondering if the all the main market movers and contributors have gone for tacos at certain times of the day, or in realising that when the City of London starts work at 7-8 AM GMT, the market moves. Similarly how many of us have witnessed sleepy Monday mornings in the market and wondered what kind of a weekend of indulgence many of the major market players have had and if they’ve woken up yet, to witness that sleepy Monday extending to the afternoon session as New York opens?
How many of us have been whipsawed, or got direction wrong on a Monday which could in fact be due to lack of market participation giving out false signals? There also appears to be an acceleration of activity mid week and a slowing down on a Friday, in the UK this Friday phenomena is often jokingly referred to as P.O.E.T.S. day.. Pi** Off Early Tomorrow is Saturday and that slow down of human interaction exists in many commercial workplaces. In short many repeating patterns in the market place are undoubtedly due to human behaviour…
Irrespective of “why” there is definitive proof that trading patterns of “when” (as opposed to why) have evolved over the past decade or so. Naturally we all concentrate on reasons why a currency would move; fundamental macro economic issues, policy decisions, data releases and whilst these factors determine values and price there is undeniable proof that because of or despite these factors price is still more likely to move in the parameters you’ll now see listed. Using the following data will undoubtedly assist traders in picking the best times to trade and therefore help increase the probability of identifying high probability set ups.
Imagine that for each currency pair, you already know:
* When trends are most likely to occur
* The best days to trade
* The most active trading days
* The best hours to trade
* The most active trading hours of the day
* How far price is likely to move during a trend
* How much of that move you can reasonably expect to capture
* How long a trend is likely to last
We’ll concentrate on one currency pair, cable (gbp/usd) to test the theories.
Read the full story....
Source: FX Central Clearing Ltd, (FXCC BLOG http://blog.fxcc.com )