Like Camels currencies can have one hump or two.

 

Like Camels currencies can have one hump or two. Which are you riding?

As you may not know the Forex Market is a 24 hour 7 days a week market. That however does not mean that trading is evenly distributed at all. Forex trading decisions are still done by human beings (even if some use robots to find trades). The humans are funny things – they have to sleep and they keep office hours. The trading volumes follow the times major financial institutions are actually open for business.

Also the local currency is mostly traded when the local markets are open. A good example of this is the Canadian Dollar (the Loonie) which has a definite peak when the Canadian financial markets are open. Especially when related to currency in the same time zone.

You could call this a ONE HUMP camel.

Cadusdvol

onehump

Then there are the other currencies who are often related to a currency in another time-zone. Often you would get a double peak as both currencies go through time-zones where they are most dominant.

GBPJPYvol

2humps

 

Then you have the strange camels which have 3 humps!!  The AUDUSD is one of them. The AUDUSD is dominant in the Australian market where the AUD is the Local currency and then dominant in the US Market where the USD is dominant.  Then strangely it is also traded quite actively in the UK market where both are not local.

 

AUDUSDvol

 

3hump camels

Then there are currencies that are not strong enough to make an impression in their local markets.  The EURJPY profile below show the JPY being over powered by the EUR to the extent that it’s biggest peak is in the UK and US markets.

EURJPYVol

 

  1. So this knowledge is important in many ways. If you are trading the Double in a Day EA where volatility plays a big role you should chose currencies and TIMES when those currencies are going to peak.  Trade when the camel’s hump is the highest or just before that.
  2. When optimizing time of day setting for EAs using different currencies you have to take the fact there many types of camels. So depending on which currency you are testing it could have between 1 and 3 optimal trading times. This is particularly important when trading the PowerPunch EA.
  3. Adapt your trading style to the camel humps. Expect breakout moves at the top of the camel hump and bounce trades in the hump valleys. Remember every currency has its own camel profile so check it regularly.
  4. The currencies are like humans. They have their own habits and change personality when in the company of other people (currency crosses). Strike up a friendship with a couple on them an get to know them a bit better. Like all friendships you will be pleased you did.
  5. Above all don’t complicate things too much like most traders do

complcated

 

You can get the camel profiles at these links:-

http://expert4x.com/forex-currency-volatility-over-a-number-of-weeks/

http://expert4x.com/live-forex-currency-volatility-information-by-timeframe/

2 Comments

  • fixer

    Reply Reply July 17, 2015

    all animals are not equal: nice explanation

    • Alex du Plooy

      Reply Reply July 17, 2015

      Yes – all forex crosses are also not equal – more important from a Money Making perspective.

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