Seasonal Trading in the Forex Market

Seasonal Trading in the Forex Market

Clues to the market direction can easily be obtained from the seasonal correlations in the currency markets. For commodity traders season trading proves to be a fundamental resource. Commodity pricing is tremendously impacted by these seasonal conditions. The foreign exchange market is also affected by this type of trading.

The repetitive economic conditions of the various countries also result in the creation of seasonal trends in the currency pairs. At specific times of the year, the trader is even provided with a directional bias when these trends are charted over a decade. Timing is the most important factor in these cases. When it comes to the seasonal traders, their worst enemy is the volatility of the forex market.

These seasonal trends are quite popular among mammoth traders and central banks. Shaking other traders and investors out of a good trade is a major goal among these central banks and other traders. To withstand the reversals and the draw downs in the long, deep pockets are required for a seasonal trade. Seasonal trading is even altogether avoided by a lot of traders.

Trading with the trend on pullbacks is the best defense that can be developed by a trader. If within a period of ten years or more a trend gets detected then the chances that this will be repeated are quite significant. For the traders, trading is all about bringing the odds in their favor and this is what seasonal trading has to offer.

Traders often have to choose between the pro-dollar or the anti-dollar when they are involved in seasonal trading in the currency market. Fluctuations in the exchange rates have primarily been driven from a long time by the U.S. dollar since it has been a component of than 85% of every currency transaction. Often the dollar’s future direction is also analyzed by a lot of traders when they use either fundamental or technical analysis or even combining both.

When it comes to the behavior of the U.S. dollar against a variety of currencies, while most traders are not aware of this, even the time of the year plays a role. With the use of indicators, past price activity can be analyzed, even with the study of technical analysis. When traders need help for looking at price in a variety of ways, list technical indicators can always come in handy for seasonal trading.

Even the market direction can be forced by the traders who actually have deep pockets. Eventually even the best of traders give up and quit even if they are capable of withstanding a specific amount of loss. When relentlessly pursuing capital gain, big traders never hesitate wiping out their competition of their way.

A recent factor that might have been noticed by a lot of traders and investors is the recent seasonal decline in the EUR/USD. Europe’s economic conditions have recently been rather bleak. There is no doubt that there is considerable risk involved in the financial markets. The risks in investing are great indeed. Future performance is never really guaranteed by past performance.

Categories: Tutorials

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