| |
|
Article Directory :: Finance & Investment Articles
Summer trading in the forex market sees liquidity thin during the period. This does not preclude movement but suggests thinner summer trading and a more defensive stance by forex market participants. This, of course refers to the Northern Hemisphere as the Southern hemisphere is in its winter months. History shows not to be complacent as summer time can bring opportunities to trade.
So how does a forex trader go about trading during summer markets? There is no hard and fast rule as history has shown markets can move and trends develop when it is least expected. One characteristic is that US afternoon sessions tend to be much quieter than usual. Forex trading activity, in general, peaks during the European-North American session and then tails off during the U.S. afternoon session. This is the normal pattern but the U.S. summer session is even thinner than usual. In addition, Friday sessions tend to be thinnest, especially after Europe goes home and traders look for early exits from the market. This can also be seen in the Global-View.com forex forum, which we find to be an excellent microcosm of forex market behavior.
Last summer was an unusual one as it setup the start of the crisis that sent global financial markets reeling and on the brink of collapse. For example, the EUR/USD traded a range of 1469 pips, 1.6040 (record high) set July 15, 2008 to a low at 1.4571 on August 26. The net dollar change for July-August was +7.5%. GBP/USD traded a high of 2.0157 on July 15 to a 1.8171 low on August 29. This was a 1986 pips range and +9.6% for the dollar vs. GBP. USD/JPY traded a more subdued range as JPY firmed on its various crosses. USD/JPY traded a high of 110.51 and a low at 103.77, which was a 674 pip range. The net dollar change for the summer period was +3.3%.
By contrast, the summer of 2007 showed tighter ranges and smaller net changes. EUR/USD traded a 493 pip range and the net dollar change was -0.8%. GBP/USD traded a 707 pip range and its net dollar change was a mere 0.4%. USD/JPY traded a wider 1297 pip range and its net change was -6.0%. While the more modest ranges in EUR/USD and GBP/USD might be more typical of summer markets, there was enough movement (e.g. USD/JPY and JPY crosses) to provided opportunities to trade.
The point of this analysis is to show that thin liquidity does not mean the market will not move or trends will not develop. While the summer of 2008 may not have been a typical market, it illustrated the danger of being complacent and that trends can develop despite thinner than usual summer liquidity. The summer of 2008 setup the gyrations in global financial markets in the months that followed and history will likely show these were once in a lifetime moves. Looking at the summer of 2007 shows there were tighter ranges in the eur/usd but a wide range for USD/JPY. So, don’t take anything for granted and treat the summer period as any other market while being alert to the times when the market is liquid and times when there may be pockets of illiquidity.
Jay Meisler is a co-founder of Global-View.com, the leading forex discussion site for more than a decade and where traders from around the globe come for the latest breaking news, flows, rumors and trading ideas => http://www.global-view.com
 EasyPublish™ this article - publishers click here
More articles by Jay Meisler
|
Free Report!
Ten Essential Secrets Of Article Marketing ... Grab Your Free
Copy Now:
Need Content?
Regular Top Quality Content for your Blog, Ezine or Website ...
Delivered Direct,
For Free!
Click For Details
Arts & Entertainment
Automotive
Business - General
Computers & Technology
Finance & Investment
Food & Drink
Health & Fitness
Home & Family
Internet Marketing/Online Business
Legal
Pets & Animals
Politics & Government
Reference & Education
Religion & Faith
Self-Improvement/Motivation
Social
Sports & Recreation
Travel & Leisure
Writing & Speaking
|
More finance articles: - Buying A Loft Condo (Steven Johanssen)
All condos and lofts are not created equally. You need to know all of the facets of each unit and condo complex in order to make the right buying decision. Find out why and if a condo or loft is right for you. - What's Your $1 Million Business Worth? (Chia-Li Chien)
What are the three most important things in real estate investment? Location, location and location. But what makes a privately held business valuable? According to Rob Slee, founder of Midas Nation, it's timing, timing, timing. During my 2nd quarter 2010 SRI Business Retreat, Slee said you have to play the Transfer Timing Slot Game if you want to maximize your business's value for sale. Let's explore what Slee meant by that. - Know What Your Numbers Mean (Chia-Li Chien)
Have you ever faced a situation in your business and found yourself saying, "I know I need to do something, but I don't know what. Just tell me what to do and I will do it." Emotionally you feel panic, fear or even shame, especially when it comes to business finances. Potentially, that could trickle down to your personal finances, as well. - Payday Loans: Responsible Lending And Borrowing (Holly Petherbridge)
Responsible lenders and borrowers go hand in hand to make financial transactions a success. Know everything there is to knwo aobut your loan before you sign the contract. Payday loans can be very helpful with emergency costs. Understand how they work in order to make the most of your loan. - Need Money? Think Private Capital Markets (Chia-Li Chien)
When it comes to capital financing options, even savvy entrepreneurs seem to harbor misconceptions. For an overview of each option, as well as the cost (expected rate of return) associated with each option, read on. But you should always consult with your team of advisors and conduct a cost analysis to help you make the right decision. - Preventing Debt Management (Mark Etinger)
Teach your family about finances and debt early on to prevent future debt problems. - However Complex Invest With Full Understanding Always (Shane Flait)
Investment types range from simple to the complex. But whatever the case, you must understand how your investment will work for and against you - or suffer the consequences. Don't let complex investments lure you into investing without proper understanding. - Avoiding Foreclosure (Steven Johanssen)
Foreclosur and Power of Sale is a scarey tght to many homeowners and a reality for others. However if done right there are way that you can avoid or at least manage it properly. - Mutual Fund Investments - Are They For You? (Wayne Gorman)
Mutual funds investment can give investors high returns when they succeed in choosing the best mutual funds. Best Mutual funds are the ones that facilitate diversified and multiple stocks purchase which is sure to give the investors high returns. The main aim of offering multiple stocks is to reduce the investors' risks of losing money. Mutual funds investment can enable its investors to enjoy high returns.
We Automatically Distribute Articles
To Thousands Of Publishers And Web Sites:
Submit Article
All content is viewed and used by you at your own risk and we do not warrant the accuracy or reliability of any of the information. The views expressed are those of the individual contributing authors and not necessarily those of this web site, or its owner, Takanomi Limited.
|
|
