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Is August the most difficult trading month?

  • #21
  • Aug 27, 2012 11:41pm Aug 27, 2012 11:41pm
In below charts, the volatility for 9 pairs are compared for past 3 years (2012, 2011, 2010) as of same date Aug 28. EUR/USD is the top row center column chart where you see that the average daily range over 360 days has dropped steadily to around 134.71pips. Compared to 2011's 156.91pips and 2010's 150.72pips, the overall market volatility has fallen over the years. Actually, the month of August last year was quite volatile so it's not always true what most financial commentators would say about this time of year.
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  • #22
  • Edited Aug 28, 2012 12:16am Aug 27, 2012 11:49pm | Edited Aug 28, 2012 12:16am
Quoting bstay2
Compared to 2011's 156.91pips and 2010's 150.72pips, the overall market volatility has fallen over the years.
Here's a closer look at EUR/USD. The indicator readings represent the average daily range in pips, measured over 360-period and 60-period. The chart for 2011 showed that it isn't always true that August is the worst month to trade. Financial commentators earn their living by giving you reasons that made sense for general public, like bankers go on summer vacations.

For those having difficulties trading this month, well the 2012 chart showed we haven't got back into the type of volatility seen in past years where your strategies had worked.
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  • #23
  • Aug 28, 2012 12:05am Aug 28, 2012 12:05am
For GBP/USD, the average daily range for 2012 is 130.38pips which has been falling steadily since 2011's 167.08pips and 2010's 192.29pips.
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  • #24
  • Aug 28, 2012 12:12am Aug 28, 2012 12:12am
Quoting JeremyWS

How much you think the price would change if in 1 specif millisecond the world
place orders for:

a) euro buy 50m, euro sell 80M

b) euro buy 450M, euro sell 480M

J.
  • #25
  • Aug 28, 2012 1:02am Aug 28, 2012 1:02am
Quoting havaiana
2 of the dumbest posts i have seen.

Low volume in August means the Market tends to move less
Trading is a 0 sum game minus transactions costs
So transaction costs are in effect higher in August because the cost of business is the same but the possible returns are lower.

Your comment just shows ignorance.

Forex it is of zero sum market... but does not means what you explain.
It means that for every unit of currency that someone want to buy, someone needs to sell. It is an exchange unit per unit and the only thing that change is the "exchange rate" (price).

If at one point on time, orders for euros at 1.2480 is 80M and order to sell are are 50M ... the 30M difference will be filled at whatever those 30M units are found to become of zero sum... if not found, then, the 30M will not be filled and the amount exchanged was only 50M units. (+unitsbuy-unitssell=0)

If at the same time instead of 80M/50M units orders, it is 480M and 450M ... still 30M difference and price would move same as if was only 80M/50M.

It is not the "volume" exchanged that moves the price... it is the un-balance of Units.

In any case, if any effect was going to be attributed to volume, it would be the complete opposite of what you said. Price tend to be quite volatile when not many players are exchanging.. what people call No liquidity. Any "smaller" un-balance can create a lot of move.

J.
  • #26
  • Edited 1:31am Aug 28, 2012 1:19am | Edited 1:31am
Quoting Fudomyo
Actually, this isn't a dumb question at all.

You can have large orders that move price on low volume, so trade volume isn't necessarily representative for price movement.

Most traders aren't watching real volume anyway, so it's not something that can be checked. There are a few reasons for this.

First, Forex isn't traded on a closed exchange, so it doesn't have actual volume data like equities or futures. Also, the market itself has structurally changed so while there may be more activity during larger moves, it only shows part of the picture...
Thanks for explaining a few things Fudomyo.
My questions were somewhat rhetorical. I have no idea what forex traders
are "looking" to check volume.

The volume of money exchange tick by tick is not known. We know the volume the futures being exchange, but that is only a small portion of the total volume and not even representative.

Volume being exchanged is irrelevant to price moving... it is the un-balance of units what makes the price move.

J.
.
  • #27
  • Aug 28, 2012 1:39am Aug 28, 2012 1:39am
Quoting jeuro
Your comment just shows ignorance.

Forex it is of zero sum market... but does not means what you explain.
It means that for every unit of currency that someone want to buy, someone needs to sell. It is an exchange unit per unit and the only thing that change is the "exchange rate" (price).

If at one point on time, orders for euros at 1.2480 is 80M and order to sell are are 50M ... the 30M difference will be filled at whatever those 30M units are found to become of zero sum... if not found, then, the 30M will not be filled and the amount exchanged...
I can't be bothered teaching the basics of markets to you so i will just give you the best advice i can. Check any market that shows volume and compare price volatility between high and low volume times.

You don't have to take my word for it, the facts don't lie

Edit: or just check what happens during the local lunch time or bank holidays etc. or check August. You theory falls to pieces in reality
  • #28
  • Aug 28, 2012 1:54am Aug 28, 2012 1:54am
Quoting havaiana
I can't be bothered teaching the basics of markets to you so i will just give you the best advice i can. Check any market that shows volume and compare price volatility between high and low volume times.

You don't have to take my word for it, the facts don't lie

"markets"???? I tough traders in this thread were talking about the forex market... sure, I can ck the volume for many markets, stock, commodities etc.

But, where you find the Forex market volume tick by tick as in the other markets, specially the spot market that accounts for the major volume being exchanged???

Still show ignorance in what info or data are available or not for forex.

J.
  • #29
  • Edited 2:04am Aug 28, 2012 2:01am | Edited 2:04am
Quoting jeuro
"markets"???? I tough traders in this thread were talking about the forex market... sure, I can ck the volume for many markets, stock, commodities etc.

But, where you find the Forex market volume tick by tick as in the other markets, specially the spot market that accounts for the major volume being exchanged???

Still show ignorance in what info or data are available or not for forex.

J.
You must have responded before my edit in the previous post

"Edit: or just check what happens during the local lunch time or bank holidays etc. or check August. You theory falls to pieces in reality"

Also it is possible to get volume information (not all of it)

What you are effectively saying is that volume does no have the same effect on the forex market like it does every other market in the world because you can't see the volume.

I have nothing more to say, happy to let the readers judge who is right or wrong (or do the research to find out)
  • #30
  • Aug 28, 2012 2:02am Aug 28, 2012 2:02am
Quoting havaiana
I can't be bothered teaching the basics of markets to you so i will just give you the best advice i can. Check any market that shows volume and compare price volatility between high and low volume times.

You don't have to take my word for it, the facts don't lie

Edit: or just check what happens during the local lunch time or bank holidays etc. or check August. You theory falls to pieces in reality
That is the point Havaiana.... Where do I check for forex volume? every tick, or lunch, or bank holidays...or the month of august???

J.
  • #31
  • Aug 28, 2012 3:08am Aug 28, 2012 3:08am
Quoting sharss
Yes, August is the worse and this is every year. Check out volume and that's the answer. All summer months aren't good, but August the worse. Why? Because this is the highest vacation time for the big boys.
I agree. And September is probably the most volatile month.
  • #32
  • Aug 28, 2012 10:21am Aug 28, 2012 10:21am
I find the period between June and august to be the most volatile.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #33
  • Aug 28, 2012 5:11pm Aug 28, 2012 5:11pm
Quoting tm9
Hey,everyone!
I'm backtesting my self-developed renko system(works both in trending+sideways condition),,,andso,i need to find the time when EUR/USD showed most choppiness/whipsaws within last 5-6yrs..
I only tested last 16months of data..
Do u think thats enough?
Any suggestions appreciated.....
Not sure if further backtesting will help. Market changes over time and what worked before may not work next time. Look at this guy's results. He had a string of winners until the market changed in August:
http://www.forexfactory.com/robertj62#79-list
No longer trading forex. Looking for full time job.
  • #34
  • Aug 28, 2012 5:39pm Aug 28, 2012 5:39pm
Yep august is always the worst, ironically it's also when I have the most time normally and therefore try to trade it out of boredom.

Lack of Volume = small moves and low range, but when a move happens there isn't enough volume to slow it down so it's over very quickly.

December isn't great with the build upto Xmas and all, but it's better than August.

Next week and normality will start to creep in, although think another week before it's back to vaguely normal.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #35
  • Aug 29, 2012 2:10am Aug 29, 2012 2:10am
Quoting Turveyd
Yep august is always the worst, ironically it's also when I have the most time normally and therefore try to trade it out of boredom.

Lack of Volume = small moves and low range, but when a move happens there isn't enough volume to slow it down so it's over very quickly.

December isn't great with the build upto Xmas and all, but it's better than August.

Next week and normality will start to creep in, although think another week before it's back to vaguely normal.
I'm surprised to hear that, I always thought you did very well at the DayTrading for a Living thread.
http://www.forexfactory.com/showthread.php?t=368099
No longer trading forex. Looking for full time job.
  • #36
  • Aug 29, 2012 2:21am Aug 29, 2012 2:21am
I agree.
No big money comes in.
  • #37
  • Aug 29, 2012 6:49pm Aug 29, 2012 6:49pm
I had dinner last night with a trader from Merrill Lynch. His job is to match institutional orders and get his clients orders filled. He said business has been rather tough of late, and he himself used the time in August to play a bit of politics. A trip to Milan to mingle with some clients. They are about to lose 15% of their team so, a good sign of the times. According to him and to re iterate some other comments made in this thread; Algorythms are taking over, and is the only growth market right now, which is why he made the switch (used to be a commodities trader).

Anyway was interesting chatting to him.
H.D
  • #38
  • Aug 29, 2012 9:37pm Aug 29, 2012 9:37pm
We have some very good traders whose live accounts are tracked at myfxbook or ForexFactory's Trade Explorer,
http://www.forexfactory.com/trades.php

Has anyone made studies into how they can manage to trade August or any other month, while others are believing in all these market talks about "August is tough"? Why did these traders do it so well?
http://i.imgur.com/Ie5uy.png
No longer trading forex. Looking for full time job.
  • #39
  • Aug 30, 2012 2:13am Aug 30, 2012 2:13am
Basic question, but is there also a typical date when life typically returns? Early September?

Yeah trading off the 5 min charts at the minimum over the last few days.. The stop and reversal behaviour is nasty... Same with prices being held for 5-15 minutes then spiking off...

The 1 min momentum indicator is missing in action..
  • #40
  • Aug 31, 2012 1:27pm Aug 31, 2012 1:27pm
August 2012 is with good results : +28% plus another 29% in affiliate
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