tag:blogger.com,1999:blog-2847890102780597763.post8047961542043079287..comments2023-10-30T05:35:52.421-07:00Comments on Reviewing Everything Forex: My Currency Trader Magazine June Article, Check it Out !Danielhttp://www.blogger.com/profile/00940108413648645894noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2847890102780597763.post-58708919763390497692010-06-05T10:49:14.703-07:002010-06-05T10:49:14.703-07:00Hello Chris,
Thank you very much for your comment...Hello Chris,<br /><br />Thank you very much for your comment :o). My study of the Asian session shows that the characteristics of this trading time evolve drastically as times change reason why I think that most commercial experts that have been or were successful will fail to succeed in the long term if they lack any adaptive criteria. The truth is that the Asian session's volatility seems to be limited and predictable but only if you adapt your expected results against market conditions. All commerical robots I know that trade this session do not do this and as volatility increases in the future they will simply get killed as movements within the Asian session will get much larger and "unpredictable" as per their coding.<br /><br />There is also a problem regarding the assumption that low volatility implies lack of directionality. If you analyse the Asian session closely you will notice that although the session is not very volatile, it is not true that it is not directional. In fact, assuming this to be the case to design a trading system will end with failure as the session does show trending - although clearly in a much smaller degree - than the rest of the trading times. Analyzing four years of Asian session trading day-by-day allowed me to see this happen quite frequently.<br /><br />The fact that the session is less volatile than the rest of the trading times does not imply the presence of exploitable inefficiencies since this information is "already known" to all market traders. It is important here to note that my finding points out that the average absolute movement and range are almost constant as time changes when compared against some volatility criteria, this in turn may be an important piece of information not currently technically evident which in turn might be useful for the development of strategies.<br /><br />To assign the lack of fundamental developments to the lower volatility of the Asian session is also most likely wrong since the lower volatility is due to the fact that the main trading parties involved US/EU/UK banks are closed at the time. It is actually low volatility due to low liquidity/volume, with the lack of substantial US/EU/UK news being only a minor contributing factor.<br /><br />Again, having the information regarding the low volatility of the session is not enough information to develop a system and current systems that assume non-directionality are also bound to fail as volatility increases. In the end, I hope I'll answer all questions you may have about this when I show my systems developed around my findings during a future edition of Currency Trader Magazine :o)<br /><br />Again you have succeeded in starting some very interesting discussions Chris. Thank you very much for your comment :o),<br /><br />Best Regards,<br /><br />Daniel FernandezDanielhttps://www.blogger.com/profile/00940108413648645894noreply@blogger.comtag:blogger.com,1999:blog-2847890102780597763.post-87223903239090557042010-06-05T06:58:24.847-07:002010-06-05T06:58:24.847-07:00Daniel-
Great article and i've been thinking ...Daniel-<br /><br />Great article and i've been thinking about that same issue lately - why so many commercial EA's trade successfully during Asian trading hours.<br /><br />I suspect the reason why they trade successfully is because of a concept you mentioned in your E-book "Market Reversion Theory". <br /><br />The idea is that any moves made in that time are likely to be reverted or re-traced. I saw this first hand when my Megadroid trade went 70 pips against me, just to come all the way back to scratch within an 8 hour period.<br /><br />I think the reason for this lack of directionality is the absence of fundamental news developments during this time. <br /><br />Its the mirror image of Friday at 8:30 AM EST when the jobs report comes out during which time you have a high likelihood of a directional move.<br /><br />So the challenge is how to measure this statistically. Pip range or range as percent of ATR doesn't quite capture it. <br /><br />Perhaps a better question is the following: How often (in percentage terms) does the price at the Asia close (4AM EST) exceed the price during the dead zone (5PM-8PM EST) by more than that 14-bar ATR? <br /><br />I suspect the answer is not very often because not much fundamental to the EUR/USD is likely to occur during that time.<br /><br />Getting back to the Friday at 8:30AM timeframe, its very difficult to determine which direction that highly directional move will take. Your chances are certaintly not much better than 50%.<br /><br />But in the Asia session, I suspect the odds are hightly likely that the ATR will not be exceeded. In other words, its much easier to predict that nothing will happen, since nothing happens 90% of the time.<br /><br />Its like the Seinfeld episode where they are proposing the pilot of the TV show and Jerry says "and then something has to happen", and George says "nothing happens", that's the point. Its a show about nothing.<br /><br />Anyway i'm rambling now, too much caffeine. <br /><br />Let me know what you think of that,<br /><br />ChrisC. Smithhttps://www.blogger.com/profile/09412551371638188354noreply@blogger.com