Which currency pair do you trade and why?

[waterbottle]

Hi all,

I've been trying to trade the AUDUSD but I am running into some issues. I rely on trends and pullbacks for my system (1 min/5 min) but I am only able to trade between 5pm-9pm. Save for the London open, this tends to be a very quiet period in which it mostly ranges and can be illiquid.

Which currency pairs offer the most activity (with trends) between 5pm and 9pm? If you trade other pairs, then feel free to mention them (and your reasons).

Cheers

 

[Modest]

EUR/USD and GBP/USD - Very liquid

 

[VSntchr]

Hi all,

I've been trying to trade the AUDUSD but I am running into some issues. I rely on trends and pullbacks for my system (1 min/5 min) but I am only able to trade between 5pm-9pm. Save for the London open, this tends to be a very quiet period in which it mostly ranges and can be illiquid.

Which currency pairs offer the most activity (with trends) between 5pm and 9pm? If you trade other pairs, then feel free to mention them (and your reasons).

Cheers

I think the obvious answer would be to open up some charts and find out for yourself!

I would guess that the European currency pairs would be most active around that time as that correlates with their morning.

 

[CanOz]

I think the obvious answer would be to open up some charts and find out for yourself!

I would guess that the European currency pairs would be most active around that time as that correlates with their morning.

I agree, so use currency futures and then plot the volume in a panel...the highest volume times are usually 1500 to 1900 Shanghai time...I think that's 1800 to 2200 Sydney time. It's get really active again at the US open, but that's getting late...

 

[ajcode]

Hi Waterbottle,

Two things that you need to look out for when trading forex are when the markets open in different countries and news.

So, for looking at when markets open try:

https://www.forex4noobs.com/forex-tools/forex-clock/

For news try either (making sure you have your web page times setup correctly):

http://www.forexfactory.com/calendar.php

or

http://www.dailyfx.com/calendar

Probably only need to look at the really important news indicated in Red.

I think both European and London markets are open during your trading time, so maybe try EURUSD or GBPUSD. JPY pairs for greater volatility and spread

Edit:
That market hours link seems to me going a bit funny on my computer, so might need to instead try https://www.forex4noobs.com/wp-content/incs/iframes/forex-clock-own.php

Cheers,

Andrew.

 

[ajcode]

Pivot Points are another thing you might want to consider. A good site for pivots is

http://www.actionforex.com/

Just select Markets/Pivot Points and it will show you the pivot points that I think are based off the new york close. The main pivot point "PP" is often useful to know as it is usually a good support/resistance point for day trading.

Cheers,

Andrew.

 

[waterbottle]

Thank-you for all the responses and suggestions. Unfortunately, I do not have access to futures data to allow me to investigate volume. If anyone has access to free historical (1-min), futures data then let me know.

I have gone ahead and investigated my question using excel and historical data from IB.
=======================================
Current situation: Trading the AUDUSD. Does not trend often enough and is unfavourable to trading between 5pm and 9pm.
Question: Which currency pair is the best to trade between 5pm and 9pm AEDST?
Approach: I used historical FX data provided by Interactive Brokers. This means that all stats are derived from price action, with no volume data available. Suitability for trading is assessed by the number of pips (range) generated between 4:29 pm & 9:29 pm.
=======================================
Methodology: Historical FX data was imported from Interactive Brokers' servers into AmiBroker 5.2. Data for 6 AUD specific pairs [GBP.AUD AUD.JPY EUR.AUD AUD.CHF AUD.USD AUD.NZD] and an additional 6 major currency pairs [EUR.USD USD.JPY GBP.USD USD.CHF NZD.USD USD.CAD] were selected (I assumed that the majors would have more volume-> increased range-> more suitable to trading). All hourly data between the 10/10/14 and 19/01/15 (69 days total) was exported from AmiBroker and into Excel. The data was then filtered within Excel so that only datapoints between 4:29 pm & 9:29 pm were left. Range was calculated by subtracting the maximum high from the minimum low within the aforementioned time period. Additional statistics were calculated as required. Range was plotted and compared to an arbitrary, 75 pip threshold (i.e. 15 pips/hr).
NB: I excluded the data from the 15/01/14 for all pairs as this was the day the Swedish National Bank decided to ditch its Euro floor. I considered the results an anomaly.
=======================================
Results: I plotted the range to eyeball which pairs offered the greatest earning potential between 4:29 pm & 9:29 pm. As you can see, a number of pairs surpassed threshold (with interesting periodicity too), but there were only a few standout performers.

​

I then quantified the total number of pips that could possibly be earned, the average number of pips one could potentially earn on any given day, and the number of days each pair spent above threshold. Clearly there was only one standout.

​

=======================================
Conclusions: The pair which has the greatest trading potential between 4:29 pm & 9:29 pm is the GBP.AUD as confirmed via eyeball of the plotted range data and its consistent #1 performance on the calculated metrics.
Interestingly, the only major currency pairs to make it to the top 5 were the GBP.USD and USD.JPY.
The consistently high performance by the GBP.AUD, GBP.USD and EUR.AUD is probably related to the fact that the London markets open at 7pm - right in the middle of our desired trading period.
=======================================
=======================================

Well that's all for me for now. I think I might be interested in further investigating the performance of the GBP.AUD at open and seeing if I can find some sort of 'edge' there. It's a shame that I did so much work/screen time for the AUD.USD ughhhhhhhhhh.

If anyone has any further ideas please post! I hope this helps someone wishing to trade FX in Aus.

 

[minwa]

Trading FX in Aus timezone is fantastic. I only trade London session and New York open, sometimes to mid day.

Pound majority and sometimes Euro. You usually get consolidation/accumulation in the Asian/Oceania session then stop running just before London open and then trend establishes early or mid London session before retracing towards end of session then New York open/early NY session you get continuation of trend. Biggest moves happen in London session.

I avoid the Franc and Yen as they are more easily manipulated by their Central Banks.

 

[waterbottle]

Trading FX in Aus timezone is fantastic. I only trade London session and New York open, sometimes to mid day.

Pound majority and sometimes Euro. You usually get consolidation/accumulation in the Asian/Oceania session then stop running just before London open and then trend establishes early or mid London session before retracing towards end of session then New York open/early NY session you get continuation of trend. Biggest moves happen in London session.

I avoid the Franc and Yen as they are more easily manipulated by their Central Banks.

How often does this happen though? It would be interesting to see some stats regarding this.

 

[waterbottle]

I made some .gif files to demonstrate activity in the GBP.AUD pair at the time the London market opens. I've divided the charts between 10/10/14 and 20/01/15 into either Trend or Non-trend charts. Each chart has the 3 zones highlighted:

1. 30 min before London opens (yellow)
2. 1 hr of activity after London open (orange)
3. 30 min after the 1st hour has ended (yellow)

NON-TREND
[video]http://gfycat.com/DopeyHappygoluckyAppaloosa[/video]

TREND
[video]https://gfycat.com/EnragedHarmoniousHoneybadger[/video]

 

[minwa]

How often does this happen though? It would be interesting to see some stats regarding this.

Not often enough for most traders who think they need to take a trade because they've sat down at the computer and opened up their charts. Super high R:R setups like this don't happen enough for most people to pay attention to.

Then you get days like last 3 trading sessions where it occurs after another. Average move 120 pips, you will already do very well if you catch a third to half of the move.



Logic behind is pretty simple - moves like that require big players. Big players require liquidity so they have to engineer stop raids for all the orders aka liquidity. A raid above the Asian session (usually consolidation/accumulation period) will trigger all the protective buy stops AND the pending buy stops of break out traders = enough liquidity for big players to load up for the ride lower.

This is graphically displayed on a daily bar chart. In a down trend you will get a lot of big range down bars with the Open in the upper 25% and Close in the lower half. Look at the Open vs the High, most of the time the Open is NOT the High. Very rarely is the Open the High as well because the market opens in Asia, consolidate, raid above the range = creating the High above the Open and then going lower.

Usually, the major portion of the move happen in London session.

Sorry kinda went off topic here. Anyway I like the Pound for its liquidity obviously and stability. Euro is good too for now but in the future it may be become dangerous due to too much European Union countries political/economic volatility which may create similar events to the recent Franc affair. Just a personal theory.

 

[waterbottle]

Logic behind is pretty simple - moves like that require big players. Big players require liquidity so they have to engineer stop raids for all the orders aka liquidity. A raid above the Asian session (usually consolidation/accumulation period) will trigger all the protective buy stops AND the pending buy stops of break out traders = enough liquidity for big players to load up for the ride lower.

I see this get mentioned alot - the fact that stops are regularly raided - not only on FX, but also for other instruments. How do you know that this isn't just natural market behaviour? I can understand your suspicions if you are trading against a market maker, but if you are trading ECN there is no central exchange where stops are recorded.
Assuming that it is natural market behaviour, the best approach would be to investigate these price points and see how often (and for how long) price action trades there.

This is graphically displayed on a daily bar chart. In a down trend you will get a lot of big range down bars with the Open in the upper 25% and Close in the lower half. Look at the Open vs the High, most of the time the Open is NOT the High. Very rarely is the Open the High as well because the market opens in Asia, consolidate, raid above the range = creating the High above the Open and then going lower.

I agree and have observed this with the AUD.USD. The problem is trying to predict when the high will occur. The other problem is trying to determine direction - if it were an uptrending day then you would expect the open to be closer to the low rather than the high.
A similar relationship exists with the close.

We will need some more stats for this.

Usually, the major portion of the move happen in London session.

Sorry kinda went off topic here. Anyway I like the Pound for its liquidity obviously and stability. Euro is good too for now but in the future it may be become dangerous due to too much European Union countries political/economic volatility which may create similar events to the recent Franc affair. Just a personal theory.

Nah, this is good discussion.
I agree that the pound is the superior pair to trade as an afternoon Aussie FX trader.
I also agree that the Euro is likely to become more unstable. The politics in Greece is heading more towards a default situation and if this occurs then there may be another swiss franc event for the Euro.

 

[minwa]

I see this get mentioned alot - the fact that stops are regularly raided - not only on FX, but also for other instruments. How do you know that this isn't just natural market behaviour? I can understand your suspicions if you are trading against a market maker, but if you are trading ECN there is no central exchange where stops are recorded.
Assuming that it is natural market behaviour, the best approach would be to investigate these price points and see how often (and for how long) price action trades there.

Well it goes back to my S&P scalping days. I was taught level II depth reading of trading ranges and how to spot potential instituitions accumulate - they can't hide their order activity in the order books. After they are done, they will hit order block levels and obivous retail stop levels. That was on a micro scale but I think markets have a fractal nature (repeat same pattern on different timeframes) and the same thing happens in FX price action.

It's pretty obvious where a retail day trader would place their stops after the market opens and trades in a range. Few pips above previous swing points/high of the day. That's whats taught in 90% of courses/books.

Linda Raschke also uses the "Turtle Soup" entry setup. It's just taking reverse trades of break out (of ranges) momentum players, which is also where stops are. Her hedge fund is ranked top 2%.

Well its all theory behind why it happens which dosn't really matter..anyone can interpret the setup how they want I find it repeats enough in the markets for me.

Definitely investigate it if you're interested you seem to work well with collecting stats and very thorough. Good luck.

 

[pipaussie]

Hi all,

I've been trying to trade the AUDUSD but I am running into some issues. I rely on trends and pullbacks for my system (1 min/5 min) but I am only able to trade between 5pm-9pm. Save for the London open, this tends to be a very quiet period in which it mostly ranges and can be illiquid.

Which currency pairs offer the most activity (with trends) between 5pm and 9pm? If you trade other pairs, then feel free to mention them (and your reasons).

Cheers

The thing is never trade AUD/USD at such a lower time frame. At least go for I hour and above. Personally, I trade 7 pairs and gold. The reason I trade this pairs is because My broker FreshForex gives free forecasts about them. I believe forecasts given by broker are the best!