ost traders have heard of over 325 points each year since
seasonal patterns, 1999 in the month of August,
something which is mostly which translates to 2.80%. While
associated with commodities. The the percentage does not seem
foreign exchange market also has extraordinary, when one takes
calendar patterns which influence leverage in to consideration, it
trading, and just like in is a different story. Had one
commodities, traders can take shorted 100,000 USD/JPY at the
advantage of them start of each August and closed
to improve their odds for success that position out at the end of
and profits. the month, the total profit would
have been in excess of $20,000
Monthly Patterns (not taking in to account
interest carry). That is an
Nearly all currency pairs have outstanding return considering
one or more months during which the margin requirement for a
they have a directional tendency. position like that is only
There are three pairs in $2,000. And this does not even
particular which have traded in consider compounding!
the same direction during a
particular month at least seven Weekday Patterns
years in a row. AUD/JPY has risen
in January, while USD/CAD has For the short-term trader, there
fallen in June and USD/JPY has are also patterns of behavior
dropped in August. In each case, which are based on weekdays. It
the moves have been significant. is a little more complicated,
Let’s take a look at USD/JPY as however, than just saying buy or
an example. sell on Monday, for example. A
secondary condition must be
On average, USD/JPY has declined applied, which can be
accomplished using the month. The simple enter-and-hold based on
result is patterns which take the pattern for a given month or
place on certain weekdays during weekday. That, however, does
a given month. leave one open to the both
in-trade draw downs, some of
An example of this kind of which can be substantial, and the
pattern is GBP/USD on Mondays in simple fact that patterns do not
December. The pound has risen 73% always repeat every time, and
of the time on Monday during the sometimes change.
last month of the year since 1999
(31 observations). The average An alternative to enter-and-hold
move has been 40 pips. Assuming a is to use calendar patterns to
5 pip spread, a trader who bias one’s trading. For example,
entered traded this pattern over a day trader could look for
the last seven years would have opportunities to buy in to
booked over 1000 pips in profits, weakness in GBP/USD on Mondays in
which translates to more than December. Similarly, a swing
$10,000 if one took positions of trader could use short-term
100,000 GBP/USD each time. breakdowns to enter in to short
trades in USD/JPY during August.
Trading the Patterns
The trader looking to employ
The examples outlined above are forex calendar patterns must
just a couple of the patterns utilize the same good risk
which can be found in the forex procedures as are always
market. There are many worth necessary. This applies
incorporating in to one’s regardless of the strategy
trading. Obviously, one strategy employed.
which could be employed is a
About the Author:
John Forman is author of The Essentials of Trading (http://www.TheEssentialsOfTrading.com) and a near 20-year veteran of the markets. He is currently the Managing Analyst & Chief Trader for Anduril Analytics (http://www.AndurilOnline.com).
Read more articles by:
John Forman
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