trade hours

if you are not a professional trader, according yo you trade style, you may have to make a desicion. For example, if you are opening and /or closing your trades in current value of a currency pair, you somehow reach the current value, evaluate it according to your strategy (or system) and apply the desicion. Using %100 automated system such as Metatrader, is out of this context of course. But for majority, this is not the case.

In this situation, you should trade in your available times. But, if you have some kind of freedom to choose your available times, which times are the best for trading? The main subject of the article.

Forex trading starts at sunday evening (in european time ) and ends at friday evening. Between this approximately 120 hours, the trading session in uninterrupted(Christmas day and such big occasions are exceptions).

So you can trade morning, noon, afternoon, evening or night. But which is the best time for trading. It would be a cliche but it depends. It depends on your trading style. You may trade using 5min charts using momentum indicators. Or you may trade using 1 hour chart for range trading.

I usually prefer momentum and trend based trading. So I should seek high volatility and volume, but not the peak times.

High volume and volatility occurs in overlapping hours of different markets:

New York 8am to 5pm EST
Tokyo 7pm to 4am EST
Sydney 5pm to 2am EST
London 3am to 12 noon EST

So, morning hours 6 am - 9 am (gmt) and afternoon (12-16 gmt) are the most critical overlapping hours. This hours are like pivot points. They indicates many things to enter a trade or closing a trade.

Big turns in trends and momentum accelerations happens in these hours generally. So if you use these hours carefully, your chance for being the correct side of the market increases dramatically.

I am using these hours in 1 hour time framed trades. I usually use morning hours to choose a side (to enter a trade) and generally close at afternoon overlapped hours.

2 systems of mine obeying these rules doing pretty well in these days. If they can prove it for a longer period, i will post them.

drawdowns

I've been busy on designing new systems that would be profitable since the last post. For now, 4 (amybe 5?) different systems are in my lab and I am using 2 of them in real trading, and the other 2 are waiting in the line. Why? Because the combination of all of 4 requires a big account that could save itself from big drawdowns. Drawdowns are one of the main threats (why not "only" but "one of them", I will explain later) for a system. Sooner or later, an average system will produce positive outcomes. But for small traders who are trying to follow a system, entry point (not of a trade but of a system) could be very important.

What is drawdown? There are some info in here and here. Check them out. I will share my ideas about systems and my trade results later.

technical analysis for FOREX

Since I am still developing and testing my forex systems, I have nothing to post about them. I will post more detailed news when I have a proven track record in these systems. Until that time, I have decided to post another kind of information which will be also helpful: This is the first post of the series which will be related with technical analysis,indicators and trading systems. I will try to explain the best points of technical indicators and systems based upon them.

Let's start with the header, technical analysis:
Technical analysis is only interested in the price movements in the market.Technical analysts seek to identify price patterns and trends in financial markets and attempt to exploit those patterns. While we have several tools and methods in technical analysis, the primary tool is the price charts.

The principles of technical analysis derive from the observation of financial markets over hundreds of years. The oldest known example of technical analysis was a method used by Japanese traders as early as the 18th century,which evolved into the use of candlestick techniques, and is today a main charting tool.

Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis from the end of the 19th century. Modern technical analysis considers Dow Theory its cornerstone.

Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques.Neural Networks and Rule Based systems are the most popular methods used in technical analysis since 1990s.

There are some main principles which are technical analysis based upon:
-Market action discounts everything
-Prices move in trends
-History tends to repeat itself


In this blog, I will try to explain some basic terms, definitions and indicators which are primary and/or popular topics in technical analysis:
-Trend
-Support and Resistance
-Chart Patterns
-Elliot Wave principle
-Moving Averages and other indicators:

Accumulation/distribution index—based on the close within the day's range
Average true range - averaged daily trading range
Bollinger bands - a range of price volatility
Commodity Channel Index - identifies cyclical trends
MACD - moving average convergence/divergence
Momentum - the rate of price change
Parabolic SAR - Wilder's trailing stop based on prices tending to stay within a parabolic curve during a strong trend
Relative Strength Index (RSI) - oscillator showing price strength
Stochastic oscillator, close position within recent trading range

I will also show some basic trading systems based upon these indicators.

strong UK data helps my system

"The pound rose sharply after figures this morning showed the key UK annual CPI inflation rate unexpectedly rose to 2.8 pct in February from 2.7 pct in January.


This came above forecasts for a slight dip to 2.6 pct and leaves the rate well above the Bank of England's 2.0 pct target."

Even though we have recovered roughly 70pips yesterday, today's UK inflation data put the overall numbers in a much better position. We only care about technical analysis in this system but, we should also note that where this income is coming from.

EURCHF trade lasted 1 day and closed yesterday night with +45 pips. good for you!..

a new trade is opened, overall conditions are better..

We have opened a new trade: EURCHF long at friday close and now it is up +35 pips.
Others are mixed: GBPAUD long is still suffering from strong AUD and EURGBP is not recovered much from its negative position.

the system benefits from collapse of USD

Since Wednesday, we are witnessing more volatility than last days and our system is benefiting from USD short positions especially. We also see strong GBP and EUR, both favor our positions. Our drawdown has ended? Maybe, but at least certainly there is a good news for us, the system is fighting back in last days.

nzdusd is stopped, overall direction is same..

Our long NZDUSD position stopped at 6907 and left us -74pips in behind.
Others are mixed. CADJPY is not going well for some days. EURCAD is moving around the same levels. EURGBP is our worst performer trade by now. EURNZD long recovered from underwater but we have also EURNZD short position and it can be closed today with a high loss. GBPAUD long is also not doing well. GBPUSD short is the best performer for some days. Total drawdown is around 1360 USD, worse than yesterday close (around 1290 USD). As my dear friend Filippou says, patience.

a new position for nzdusd, system total is still going down..

We have a new trade in NZDUSD : A long position from yesterday closing 0.6977.
This pair has spiked upside with the strong retail sales data, up 0.5% in January, which is absolitely unrelated with our trade entry of course.
The trade is now under water but we see a small recovery. Other pairs are not helping to the bottom line either. Especially EURCAD and GBPAUD are having though times.

If GBPUSD stays around 19300, we will have an opposite position (GBPUSD short) at 17:00 PM EST.

a correction

If you tried to calculate total values of trade results, you can see there was a miscalculation in total results line. I've corrected it.

first impressions for the new week

Regarding to Friday closing values, we have almost no change in total while we are having the first half of the Monday. One important note is that we have new EURNZD position in addition to old one. But this one is a short position so we are hedging in EURNZD and profit/loss has been locked for now.
We currently 10 currencies, but this does not mean that we can have max 10 positions. With hedging, we may have more than 1 position in each pair. This is essentially true for "A" type trade entries.

Here is the latest snapshot that has been taken 2 hours ago:

bad results for euro and commodity currency trades

Since I have mostly euro denominated trades in the system, I have seen a big drop in my equity with losing euro and winning commodity currencies.

Total result since yesterday is -462 pips and most of them are belong to eurcad,gbpaud and eurnzd. Seeing this, I decided to drop 1 of 2 EURNZD and GBPAUD trades from the system and now we have total 10 currencies.

Anyway, we are still neare record high levels of the system (regarding to backtest data), I have a high level of curiosity about what will happen in the week.

new players are on the pitch

Our system has been updated with 5 new pairs with 6 new trades.
The only pair that has been removed is AUDUSD.
CADJPY,CHFJPY,EURNZD(B),GBPAUD(A AND B) and NZDUSD are newcomers.

Currently 8 of 12 trade pairs are in a position, 4 of them are neutral.
With these changes, trade history and trade profile of the system has been changed, but the main idea is same.

Since monday, we see a little recovery even though "current distance from the last top" is near record high values. All trades except GBPUSD moves in positive direction and totally give us 147 pips in 8 trades since wednesday.

A good start to the week

The week has been started with a closed position on GBPUSD (-144 pips), and 2 new position GBPUSD short and EURCHF long.

EURNZD is the best performer while EURGBP still continue to upset me.
AUDUSD would be closed this night, I am watching it closely..

March 2nd, initial values

Since the last post, 4 pairs lost several amount of pips, 2 pairs (especially EUR/NZD) gained some pips. The current condition is better than last post time, but current outlook still seems negative.



These numbers are totally results of backtests and not giving the real performance of the system.

Lastly, I am listing the last condition of currency group in my system :

a group for test

Hi again,
I' am working on the system and especially working on finding the best group of currency pairs with best trade style. Here is my first group offering and current conditions of them :


Currency Trade Branch Start Date Start Price Current P. Direction Current Condition
EURNZD A 26/02/2007 18931 19007 L 76
EURCAD A 26/10/2006 14244 15488 L 1244
EURGBP B 05/02/2007 17:00 6585 6736 S -151
EURCHF C -
AUDUSD B 14/02/2007 17:00 7842 7854 L 12
GBPUSD A 26/02/2007 17:00 19619 19621 L 2
EURUSD B 15/02/2007 17:00 13138 13223 L 85

Current distance from the top :$1499 (prev:$1453)

I will try to update the current conditions of the trades each day..

a trial for a new system

hi all,

I am an amateur forex trader and have been trading for 3 years with some breaks (military duty and my main job requirements).

Now, as always recommended to traders, i will try to put my trading logs to check them later, to remember what I have done in past, what should I do in future.

As a beginning, I will post my experimental trading logs in demo accounts. These trades are ordered by a trading system which has been in development phase for some months. I have built 3-4 trading systems but none of them was as solid as expected.

My last system is mainly based on MACD indicator (with some assistance of course) and working on daily data. This system produces 3 kinds of trade order. I haven't given any name for them but for now lets say, entrepreneur, slow mover, top billing.

Each one has different attributes; triggers in different cases, ends in different cases.
According to my statistical works, in most of currency pairs, entrepreneur and top billing have lower risk/reward ratio. So as a beginning I will use them heavily, rather than slow mover.

I am trying this system for lots of pairs, but I see their reaction are very different for same parameters. Some of them are moving in one direction but with large pullbacks, some of them prefer to simply move in one direction generally. Furthermore, some of them is not even trend-friendly. (I am sure most of you know these very well, but I like to write my thoughts to see them later and say "do I really think in this way?, ouch!..")

So I treat them seperately, using (slightly or heavily) different approaches for every pair.
As a result, I use different kind of trade orders for different kind of pairs to get a good risk/reward ratio.

I will post them their current condition and will see what will happen..

Stay tuned..