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Seasonal Patterns aid Forex Trading Strategy


While you may have read several guides to trading on the Forex market, many of them use strategies which are not inclusive of all the information that is available. For instance, Forex trading strategies often include information on what time frames for trading are considered the best for the technical signals that are being followed, but it is much rarer to find commentary on any seasonal variations between the currencies.

It is not always clear why the exchange rate between different currencies may vary with the time of year, but in any sort of trading it is valuable to observe what the market does whether or not it complies with what you believe it should do. In fact, to recognize that the market is bigger than any trader and will do what it wants is one of the basic lessons that a beginner must learn. So why not use statistical observations rather than trying to second-guess what hypothetical rational markets ought to do?

For instance, there is an observed linkage between the USD/JPY and the time of year. You may already be aware that this currency pair moves in lockstep with the Nikkei index. This seems to be because the US buys so many Japanese goods. If the US dollar is up in comparison to the Japanese yen, then the shares of the Japanese companies are also up. What you may not know is that the USD/JPY is also usually up in July and down in August. If you incorporate such observations into your trading strategy, then it you will be on the side of the prevailing trend the majority of the time and likely to be more successful.

Another seasonal observation concerns the EUR/USD, representing the euro and US dollar relationship. The US dollar has been observed to be strong in January the majority of the time, which means that the currency pair EUR/USD is generally weak. There is an explanation for this behavior, and that involves funds and companies pulling currency back to their countries at the end of the year for their annual report. When the New Year starts, many of those investments are made again in the US, meaning that dollars are bought and the currency becomes stronger.

It is important to include all available information about the movements of the Forex when considering your Forex trading education and strategy. There are many other aspects to trading, including particularly your money management, and examining the expected profit and loss to ensure that you increase your odds of success in each trading that you take. Just because trading Forex online has now become so simple, it does not mean that a winning strategy is any easier to find or implement. You need to educate yourself on all the different aspects of trading to maximize your success.

Mark Soberman of NetPicks LLC has been trading for over 20 yrs and offers free educational resources, live forex and futures signal services, as well as a new product focused on trading the forex market. http://www.netpicks.com/fxlive

Mark Soberman of NetPicks LLC has been trading for over 20 yrs and offers free educational resources, live forex and futures signal services, as well as a new product focused on trading the forex market. http://www.netpicks.com/fxlive


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