Seasonal Trading the Forex Market

Seasonal correlations in the currency markets may provide clues as to market direction. Seasonal trading has been a fundamental resource for commodity traders. Seasonal conditions have a major impact on commodity pricing. This type of trading also applies to the foreign exchange market.Seasonal trends in the currency pairs are created by repetitive economic conditions of the various countries. These trends can be charted over a decade to provide the trader a directional bias at certain times of the year. Of course, timing is everything. Forex volatility can be the worst enemy of the seasonal trader.Central banks and other mammoth traders are well aware of these seasonal trends. They will do everything in their power to shake you out of a good trade. A seasonal trade may require deep pockets to withstand reversals and drawdowns along the way. Many traders may want to avoid seasonal trading altogether.The best defense a trader can develop is to trade with the trend on pullbacks. If a trend has been detected over a period of 10 years or more, the chances are pretty good it will happen again. Seasonal trading can put the odds in your favor, and that is what trading is all about.The big boys have deep pockets and can force market direction. Even the best of traders can only withstand a certain amount of loss before throwing in the towel. In relentless pursuit of capital gain, the big traders are willing to go the distance to wipe out as many traders as possible.A recent seasonal decline in the EUR/USD came to my attention. Economic conditions in Europe were rather bleak. This trade seemed like a no brainer. I entered the trade with confidence in my assessment. Fortunately, I rarely trade without some kind of stop loss in place. As it turns out, the big boys reversed the market for no apparent reason than to relieve me of my capital assets.I am quite sure they are out to get me. They are more than likely out to get you too. So, what are we going to do about it? If you figure something out, please let me know.

Comments are closed.