As many of you may already know - if you have been following my blog for a while - I have become a somewhat "regular" contributor to Currency Trader Magazine, one of the most well-known and respected magazines published in the area of forex trading. Besides featuring very famous and well-respected authors such as Barbara Rockefeller, the magazine tries to give people quality articles about both fundamental and technical aspects of currency trading. I have to say that Currency Trader Magazine had become a monthly "must-read" for me before I started writing in it, with its articles being very good to catch both a birds eye view and a practical perspective over current market conditions but being an author now gives me the opportunity to humbly contribute to this great monthly magazine. On todays post I want to talk to you a little bit about my June article and how I think it provides very valuable information about market inefficiencies and the way in which they evolve over time. You can download the June edition of the Magazine -containing my article- for free here(if it is already August and youre reading this then you will have to purchase the issue separately).
The article I wrote for the June issue attempts to address a significant question I had been asking myself for a while. Is the market so inefficient that the movements within trading sessions are predictable ? I wanted to take a look at the Asian session in particular and answer this interesting question regarding whether or not we could look at this session for a period of 4 years and predict the future magnitude of absolute movement and the range within this trading session. Would it be possible that the market moves in a predictable way during this period of low volatility ? I started to do some research to find out.
In the article I go through an analysis of the Assian sessions range and absolute movement within the past 4 years on the EUR/USD, EUR/GBP and EUR/CHF attempting to find a "pattern" of evolution that could signal the existence or absence of a "predictable movement" within this session. Of course, part of this research was inspired in the fact that many commercial system sellers have attempted to exploit inefficiencies around this session that have worked for a while and have then become obsolete. I have always thought that there is some predictability around the Asian session but attempting to exploit it without any adaptability is simply a behavior prone to eventually fail (you really wonder how many of those sellers are really traders).
The results I found were - for me - absolutely breath taking. The analysis of absolute movement values for the three different pairs revealed nothing spectacular, showing that the ranges evolve widely as the market changed. Effectively this proves why Asian session scalpers are doomed to fail, the character of the session changes tremendously with time and exploiting it using such systems in the long term is not going to work. However I then took a different look at the picture and evaluated the range and absolute movements differently - taking certain additional market elements into account- obtaining a wonderful result. As a matter of fact, what I found confirms what I have suspected for a long time.
Not only are the Asian session conditions predictable, but they are almost the SAME for the EUR/USD, EUR/GBP and EUR/CHF. This means that my article found a key part of fundamental market behavior, a characteristic of the market that appears to remain unchanged as time goes by. Of course, the details of this analysis cannot be revealed here (you need to go ahead and read the article ! :o) ) but you will see that my analysis shows clearly that the Asian session is technically inefficient and that creating systems to exploit this inefficiency is indeed possible. During the next few months I will be working on the creation of several different mechanical trading systems to use this research to show that effectively the behavior within the Asian session lends itself to mechanical exploitation.
I hope you have read and enjoyed this post and my June article. Please leave any comments, questions or suggestions you may have :o). As always, if you want to learn more about my work in automated trading and how to use forex trading systems that use sound trading techniques to be likely profitable in the long term please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
The article I wrote for the June issue attempts to address a significant question I had been asking myself for a while. Is the market so inefficient that the movements within trading sessions are predictable ? I wanted to take a look at the Asian session in particular and answer this interesting question regarding whether or not we could look at this session for a period of 4 years and predict the future magnitude of absolute movement and the range within this trading session. Would it be possible that the market moves in a predictable way during this period of low volatility ? I started to do some research to find out.
In the article I go through an analysis of the Assian sessions range and absolute movement within the past 4 years on the EUR/USD, EUR/GBP and EUR/CHF attempting to find a "pattern" of evolution that could signal the existence or absence of a "predictable movement" within this session. Of course, part of this research was inspired in the fact that many commercial system sellers have attempted to exploit inefficiencies around this session that have worked for a while and have then become obsolete. I have always thought that there is some predictability around the Asian session but attempting to exploit it without any adaptability is simply a behavior prone to eventually fail (you really wonder how many of those sellers are really traders).
The results I found were - for me - absolutely breath taking. The analysis of absolute movement values for the three different pairs revealed nothing spectacular, showing that the ranges evolve widely as the market changed. Effectively this proves why Asian session scalpers are doomed to fail, the character of the session changes tremendously with time and exploiting it using such systems in the long term is not going to work. However I then took a different look at the picture and evaluated the range and absolute movements differently - taking certain additional market elements into account- obtaining a wonderful result. As a matter of fact, what I found confirms what I have suspected for a long time.
Not only are the Asian session conditions predictable, but they are almost the SAME for the EUR/USD, EUR/GBP and EUR/CHF. This means that my article found a key part of fundamental market behavior, a characteristic of the market that appears to remain unchanged as time goes by. Of course, the details of this analysis cannot be revealed here (you need to go ahead and read the article ! :o) ) but you will see that my analysis shows clearly that the Asian session is technically inefficient and that creating systems to exploit this inefficiency is indeed possible. During the next few months I will be working on the creation of several different mechanical trading systems to use this research to show that effectively the behavior within the Asian session lends itself to mechanical exploitation.
I hope you have read and enjoyed this post and my June article. Please leave any comments, questions or suggestions you may have :o). As always, if you want to learn more about my work in automated trading and how to use forex trading systems that use sound trading techniques to be likely profitable in the long term please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
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