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September 11, 2009

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frink

one further point about the range of FX - most people will trade the euro session when they are daytrading FX. Currently you'll find the eurusd having anywhere from a 30-60 pip range on an average day(depending on what you use as a start and finish time for the session). Add in the fact that quite a few of the high and low prints made are news related spikes and it starts to look even worse. Not exactly as dead as the SPI, but far from the volatile beast that most new traders think it is.

Keir

Great article TH, love reading your posts mate.

sinner

Spoken like someone with truly no knowledge of the FX market? Aside from E/J the pairs you picked are all chosen by traders for their specifically low volatility. Especially E/U is known for the nothing-nothing-boom style of movement.

Why don't you show us the avg % for GBP/CHF, GBP/JPY, EUR/AUD?

Generally speaking, as a currency trader, I will wait for the Frankfurt open (and London one hour later) and trade the hottest of the four majors (E/U, G/U, U/CHF, U/J) or its corresponding JPY pair.

THT

I wasted 2 minutes of my live running the GBPJPY & GDPCHF daily range stats as per the fools suggestion and I was spot on. People think they are trading something with large volatile % moves but they are as per usual clueless and even more dangerous, think they are knowledgeable. And as always not even smart enough to check before they open their mouth.

GBP/CHF daily Range 0.89%!!
GBP/JPY daily Range 1.35%

They don't even get close to Equity indexes.

sinner

TH, I find it pretty amusing because I was thinking about this more last night. The pairs you picked are all closely index correlated these days. E/U is supposed to be 90% correlated to SP500 and U/J after the crash has been highly inverse correlated to the DJ.

Why don't you work it out in pips instead of % and see the difference. For one thing, you will find the pairs you listed are somewhere "in the middle" of the forex volatility movements, certainly not on the higher end. This chart shows the average daily range in pips from Apr 08 to 09.

http://www.aboutcurrency.com/images/university/currencypairs/currencypairs_tradingrange.jpg

As per "the fools" suggestion, you will get way more pips trading GBPCHF, GBPJPY or even plain old GBPUSD off the London open than you would trading the FTSE, why don't you pull up a chart about 6pm tonight and see if I'm wrong.

THT

OMG. That's exactly my point. The reason newbies think its moves so much is because of the leverage. As a PERCENTAGE range they don't move much. To get meaningful P&L moves you have to use large LEVERAGE. If FX traders had to trade risk adjusted they would all be broke in a month.

sinner

Whatever man, I look for 30-50 pips a day with a consistent 1:2 R:R and know plenty of traders do the same. The leverage is larger, so what? I risk 1% to make 2%, I don't pay attention to the leverage.

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