Differences Between Markets (mainly Fx)

[Kiwi 16]

The other day I posted this on another thread:

 

I agree with the first post and would have fully agreed with some of the intermediate posts ... but have changed my mind over the last 8 years.

 

I have come to believe that different markets will have times best suited to various approaches. It might be that those times correspond with maximum volatility but that depends if the strategy does best in those circumstances; volatility is also a crude measure of what is happening.

 

IMO, crude measures are most appropriate when trading auto systems. In my recent experience of automating and trying to automate trading approaches I've found this to be true and I've also discovered value in indicators that I abandoned as I became more discretionary.

 

When trading a discretionary strategy then the strategy and time of day may match not because of size of moves but because of the nature of the moves. For example, with HSI I skip the first 45 minutes, which are also the most volatile times. Later trend and flow become more readable to an extent that overcomes any loss of volatility.

 

Similarly in some markets there are specific situations that seem to favour different approaches:

- 6am gmt the early risers begin often pushing the market over an hour or two to a desirable position. this push process is both readable and tradable.

- 8am gmt is the traditional start for breakouts and seems to be promoted for trends (which do sometimes develop beautifully during the european morning)

- 8:30am nyt is news time (I think, its not time I pay attention too as I sleep) which has high volatility but poor trendiness because of US news shocks. An hour or so later Steven obviously finds the post news market to be more readable and trades any resulting action.

 

One trader's opinions of course

 

 

Then today I came across this article from the free periodical Currency Trader. Although it was written before the debt crisis it adds to my comments and I think that the information is definitely of value to fx traders.

 

 

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Currency Personalities.pdf