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Trading in Summer Months

  • #1
  • First Post: Edited 3:57pm Aug 18, 2010 1:46pm | Edited 3:57pm
Apparently, Summer, especially August is the worst month to trade with many institutional traders in Europe on vacation and NA on holidays as well. The best strategy many suggest is to simply go on vacation ourselves and resume trading when September comes around.

But for those of us who cannot afford to or simply do not want to, any strategies and ideas how we can trade profitably during the Summer? I thought I start this thread to get some ideas from everyone.

Basically, the Question: What do you do during the "Summer Months"?
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  • #2
  • Aug 19, 2010 1:37am Aug 19, 2010 1:37am
I usually continue trading during Summer. But isn't Summer almost over now?
  • #3
  • Aug 19, 2010 10:03am Aug 19, 2010 10:03am
Quoting enivid
I usually continue trading during Summer. But isn't Summer almost over now?
Dunno. Dunno when "Summer months" are supposed to start? June? July? August is definitely the "Summer month". Seems that "Summer months" are supposed to end when September comes around.
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  • #4
  • Aug 19, 2010 10:06am Aug 19, 2010 10:06am
Btw, the market is So unpredictable today. Bad US Econ data and yet USD totally annilated AUD and CAD.

"Summer Month" effect?
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  • #5
  • Aug 19, 2010 2:07pm Aug 19, 2010 2:07pm
Well, if you really have to trade, you trade a range based system.

Right now, you can buy the Yen at 85, and sell it at 85.90, rinse and repeat. Also you can Sell the Euro at 2920 and buy it back at 2800. Of course, sooner or later the sideways trend will be broken. It's usually right after the labor day holiday in the US, everyone takes a break and summer is unofficially over after that.

I think aussie is just waiting for the election results, and then will take off in one direction.
Disregard all prognostications.
  • #6
  • Aug 19, 2010 3:36pm Aug 19, 2010 3:36pm
Quoting Forexia
Btw, the market is So unpredictable today. Bad US Econ data and yet USD totally annilated AUD and CAD.

"Summer Month" effect?
Hey forexia,

I remember thinking something similar to that not too long ago at all.

So I made a risk appetite index so I could monitor equities and commodities after news releases to better understand the relationship between USD and economic news.

Here is an example of how it happens sometimes:

a) Bad US data comes out
c) Scared equity and commodity traders/investors get out of their positions and into cash and Tbills (during US session and news)
d) This increases demand for USD and pushes the price up

Again I emphasize sometimes. Think about how the when the DOW tanks, so does eurusd. Demand is rising for USD so eurusd goes down.
  • #7
  • Aug 19, 2010 3:39pm Aug 19, 2010 3:39pm
There is absolutely no difference trading in the summertime compared to winter. Don't follow fundies and maybe you'll see that the market isn't all that "unpredictable". Get a plan, trade the plan. The only thing worth trading off of in the long run is price.
I dream, therefore I become.
  • #8
  • Aug 19, 2010 3:42pm Aug 19, 2010 3:42pm
And as for ranges, that's something I've been pondering this summer.

My favorite is hour charts and price action with maybe a MA or three, but when the market is ranging I have been enlisting the help of smaller time frames with indicators.

I have not really been so much of a fan of indicators for entry signals, but when done right (multiple time frames and support/resistance/round numbers) it can be pretty profitable.

For example if you can choose the right time to employ a ranging strategy. Times could be going into a market open, when the market is waiting for a very important piece of news, and times that the market usually ranges (NY afternoon).

Then you can't ignore the MTF. I would suggest plotting round numbers and SR (from higher time frame like 4H). Then move down to a "medium" time frame (like 15M) and pop on some stochastics and bollinger bands. When price approaches SR or a RN, and at the same time is outside the bands and is overbought/oversold, switch down to the 5m or 1m.

On the smaller time frames look for a 123 reversal or M/W pattern (search FF there's tons on this) as well as signals from some sort of trigger producing indicator like MACD. Of course an indicator like MACD is going to spit out tons and tons of false signals, but when used in the context of MTF and price action, they can be a help.
  • #9
  • Aug 19, 2010 3:45pm Aug 19, 2010 3:45pm
Quoting mike w
There is absolutely no difference trading in the summertime compared to winter. Don't follow fundies and maybe you'll see that the market isn't all that "unpredictable". Get a plan, trade the plan. The only thing worth trading off of in the long run is price.
Fundamentals can influence supply and demand though, so they are still important to be aware of. I'm not saying to base your trades off of them but they are not completely irrelevant.
  • #10
  • Aug 19, 2010 4:01pm Aug 19, 2010 4:01pm
Quoting frankkn
Fundamentals can influence supply and demand though, so they are still important to be aware of. I'm not saying to base your trades off of them but they are not completely irrelevant.
To each their own, and there are literally 100s of ways to make it. In my experience, focusing on fundamentals creates more of a problem than anything unless you are trading longer term than what most here are. Maybe your experience has been a bit different, that's just my opinion really. Have a good one guys, there's really nothing more I could add to this thread. Price is the dominant factor and everyone will either wash out or come to terms with that one day. BTW, your motorhead story is awesome my man.
I dream, therefore I become.
  • #11
  • Aug 19, 2010 5:30pm Aug 19, 2010 5:30pm
Quoting mike w
There is absolutely no difference trading in the summertime compared to winter. Don't follow fundies and maybe you'll see that the market isn't all that "unpredictable". Get a plan, trade the plan. The only thing worth trading off of in the long run is price.
There is a "Winter Month" slow trading too? Geez, when can you trade Forex? Spring and Fall and that's it?

Thanks for the advise everyone. Really helps
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  • #12
  • Aug 19, 2010 5:37pm Aug 19, 2010 5:37pm
Quoting mike w
To each their own, and there are literally 100s of ways to make it. In my experience, focusing on fundamentals creates more of a problem than anything unless you are trading longer term than what most here are. Maybe your experience has been a bit different, that's just my opinion really. Have a good one guys, there's really nothing more I could add to this thread. Price is the dominant factor and everyone will either wash out or come to terms with that one day. BTW, your motorhead story is awesome my man.
I do focus on price action but with an awareness of fundamental developments as I find, fundamental factors do dictate an overall direction of where a currency pair is going. But for market entry, you need technical signals, I find.

But price action without volume is a bit difficult to follow.
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  • #13
  • Aug 20, 2010 12:15am Aug 20, 2010 12:15am
You can trade in August (and past half December, same low volumes) but you have to be ready for it.

Now, I am mostly in futures but I also trade some 6E aka EURUSD future and Forex. I switched to lower time frames and am using mostly trend-fading strategies like others said above.

One important tip is also to watch for news (calendar on this very site), for two reasons:

- with the low volumes come an easier influence on the market by the "red" flagged news and I stay out of the market for 5-10 minutes before and after them

- before important news it's easier to see an intraday ranging market (so, use trend fading) and after those news it's possible to sgnatch some 20-40-60 pips by using trend following strategies.

Overall August is bad, you should stay out as much as possible since it's easy to get whipsawed or stopped, expecially on Fridays. Expecially today, options are due to be in their last day before expiration.
  • #14
  • Aug 20, 2010 3:20pm Aug 20, 2010 3:20pm
Quoting dfumagalli
You can trade in August (and past half December, same low volumes) but you have to be ready for it.

Now, I am mostly in futures but I also trade some 6E aka EURUSD future and Forex. I switched to lower time frames and am using mostly trend-fading strategies like others said above.

One important tip is also to watch for news (calendar on this very site), for two reasons:

- with the low volumes come an easier influence on the market by the "red" flagged news and I stay out of the market for 5-10 minutes before and after them

- before important...
True. It's so hard to trade the news. I have noticed the tight range before the news and it's so hard to take advantage of it. With the range so tight, the pips are low and you never know when the range is going to break. And then the trend following the news, you never know when the trend is going to end. Sometimes the trend only lasts for like 1 hr - after the news with tiny movement.

For next year I will know, I am going to take a vacation, a stay-at-home vacation if I still can't afford it during the month of August.

I just hope December is not as slow. It's the 2nd half of December, you say, that it gets slow?

Thanks
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  • #15
  • Aug 21, 2010 2:05am Aug 21, 2010 2:05am
Yes, the weeks around and past Christmas are as slow as August and the beginning of January is not that great as well.
  • #16
  • Aug 22, 2010 12:10am Aug 22, 2010 12:10am
Quoting dfumagalli
Yes, the weeks around and past Christmas are as slow as August and the beginning of January is not that great as well.
Good to know! I won't feel too guilty for taking an extended X-Mas/New Year holiday this year then!

Thanks for the info!
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  • #17
  • Aug 22, 2010 12:25am Aug 22, 2010 12:25am
Quoting mike w
There is absolutely no difference trading in the summertime compared to winter. Don't follow fundies and maybe you'll see that the market isn't all that "unpredictable". Get a plan, trade the plan. The only thing worth trading off of in the long run is price.
Great advice, it has only taken about 5 years for this to sink in for me, onwards and upwards now.
  • #18
  • Aug 22, 2010 12:30am Aug 22, 2010 12:30am
Quoting frankkn
And as for ranges, that's something I've been pondering this summer.

My favorite is hour charts and price action with maybe a MA or three, but when the market is ranging I have been enlisting the help of smaller time frames with indicators.

I have not really been so much of a fan of indicators for entry signals, but when done right (multiple time frames and support/resistance/round numbers) it can be pretty profitable.

For example if you can choose the right time to employ a ranging strategy. Times could be going into a market open, when...
I came to the same conclusion recently too, always loved pa at sr, never really conviced about RN but like them too now.

The 123 reversal is nice, check out the 2b reversals too, you will love them eventually and see them all over the place near those 123's.
  • #19
  • Aug 22, 2010 11:08am Aug 22, 2010 11:08am
Quoting mike w
There is absolutely no difference trading in the summertime compared to winter. Don't follow fundies and maybe you'll see that the market isn't all that "unpredictable". Get a plan, trade the plan. The only thing worth trading off of in the long run is price.
here here
  • #20
  • Aug 22, 2010 11:57am Aug 22, 2010 11:57am
Quoting frankkn
And as for ranges, that's something I've been pondering this summer.

My favorite is hour charts and price action with maybe a MA or three, but when the market is ranging I have been enlisting the help of smaller time frames with indicators.

I have not really been so much of a fan of indicators for entry signals, but when done right (multiple time frames and support/resistance/round numbers) it can be pretty profitable.
The only thing that I have against using shorter timeframes is that they give so little pips. I tried switching to shorter time frames, but I saw a move only gives like $80 profit on a standard lot.

If you trade with a broker that charges you commissions, kinda makes you think is it worth it to invest a standard lot plus commission just to get
< $100 profit.
Make your losses in demo. Earn your profits live.
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