Volume forex strategies
Is a Reward to Risk Ratio Inherently Volume forex strategies Than Another? How are price formed in the Stock and Forex markets?
In the last article in the series, we discussed robust trading ideas, comparing moving averages with a channel breakout strategy, showing how the latter is of much greater value and how using a moving average system may show great results in back testing but can be fatally flawed in actual trading. The reason that channel breakout systems have stood the test of time is likely because markets trend in the long term and a new multi-month high is always going to have much more psychological significance than the crossing of two arbitrary moving averages. The findings strongly support the argument that any system based on predictable market behaviour, is likely to be much more robust than one based on arbitrary mathematical algorithms. This has been exploited in the futures markets with strategies such as the opening range breakout.
The New Market Wizard’ by Jack Schwager. The most liquid period is the opening. Liquidity starts falling off pretty quickly after the opening. The second most liquid time of day is the close. Generally speaking those patterns hold in almost every market. Is a Reward to Risk Ratio Inherently Better Than Another?
How are price formed in the Stock and Forex markets? While the foreign exchange markets have no fixed open, nor close, being fragmented between banks, brokers, electronic trading platforms and time zones, they too still display very predictable behaviour. I have never seen similar analysis done on the foreign exchange markets before, nor seen a strategy published before to exploit the phenomenon. This is probably because it is impossible to get accurate, historic, or real-time volume data for foreign exchange. Barclays, from their BARX trading platform. The first two graphs below show the percentage of daily volume traded for each hour of the day, for the major currency pairs. Volatility : Stretch indicator and Damiani Volameter v.
Parabolic would always have either a long or short position in the market. When Parabolic generates a buy signal, for example, a rising series of dots appears below current prices. As the market moves higher, the dots rise also, first slowly and then more rapidly. Both conditions must be true on the same bar.