How to make money Trading Seasonal Patterns in Forex

rav700

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I am starting this thread to discuss Seasonal patterns in Forex and from my observation ..Having these patterns in you forex mental vocabulary should help you a lot to decide your trading plan for the month.....
How to profit from it is what we shall discuss...........:cheesy:
 
The Analysis...........

Speculate to accumulate on Forex but watch those patterns.
Forex Trading Profits From Calendar Patterns by: John Forman
Most traders have heard of seasonal patterns, something which is mostly associated with commodities. The foreign exchange market also has calendar patterns which influence trading, and just like in commodities, traders can take advantage of them
to improve their odds for success and profits.

Monthly Patterns

Nearly all currency pairs have one or more months during which they have a directional tendency. There are three pairs in particular which have traded in the same direction during a particular month at least seven years in a row. AUD/JPY has risen in January, while USD/CAD has fallen in June and USD/JPY has dropped in August. In each case, the moves have been significant. Let’s take a look at USD/JPY as an example.

On average, USD/JPY has declined over 325 points each year since 1999 in the month of August, which translates to 2.80%. While the percentage does not seem extraordinary, when one takes leverage in to consideration, it is a different story. Had one shorted 100,000 USD/JPY at the start of each August and closed that position out at the end of the month, the total profit would have been in excess of $20,000 (not taking in to account interest carry). That is an outstanding return considering the margin requirement for a position like that is only $2,000. And this does not even consider compounding!

Weekday Patterns

For the short-term trader, there are also patterns of behavior which are based on weekdays. It is a little more complicated, however, than just saying buy or sell on Monday, for example. A secondary condition must be applied, which can be accomplished using the month. The result is patterns which take place on certain weekdays during a given month.

An example of this kind of pattern is GBP/USD on Mondays in December. The pound has risen 73% of the time on Monday during the last month of the year since 1999 (31 observations). The average move has been 40 pips. Assuming a 5 pip spread, a trader who entered traded this pattern over the last seven years would have booked over 1000 pips in profits, which translates to more than $10,000 if one took positions of 100,000 GBP/USD each time.

Trading the Patterns

The examples outlined above are just a couple of the patterns which can be found in the Forex market. There are many worth incorporating in to one’s trading. Obviously, one strategy which could be employed is a simple enter-and-hold based on the pattern for a given month or weekday. That, however, does leave one open to the both in-trade draw downs, some of which can be substantial, and the simple fact that patterns do not always repeat every time, and sometimes change.

An alternative to enter-and-hold is to use calendar patterns to bias one’s trading. For example, a day trader could look for opportunities to buy in to weakness in GBP/USD on Mondays in December. Similarly, a swing trader could use short-term breakdowns to enter in to short trades in USD/JPY during August.

The trader looking to employ Forex calendar patterns must utilize the same good risk procedures as are always necessary. This applies regardless of the strategy employed.

There is, of course, no such thing as a 'certainty' in speculation of any sort. Never gamble what you cannot afford to lose and take professional advice or abstain if in doubt.
 
This is true and unbelievable.......

According the the seasonal charts.........
The month of may is a cable negative month....
May 2007....
The highest price on 1st may was 2.0070 and the current price of cable ie 1.9745 and the low would have been 1.9700
So the actual profiting pips would have been 370 pips from the 1st of May 2007 to the 18th of May 2007...These are the facts for 2007 now I am posting the charts and will give you the analysis in the next post...
 

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My Analysis

These are my thoughts....

According to the charts at some point in the 3rd week of may there is supposed to be a rise which I think we have seen and now a fall till the end.....of May...

So the current price is at 745....I think we could see 645-670 at some point next week and then we might see the turn up......

In an ideal world...I would like to 780-785 and then I would go short---with a target of 100--150 pips

I will work on the June analysis Next week....
But I would definately be going long on cable in June as this is supposed to be very GBP Positive......
 
thats interesting Rav,

looking forward to reading more of this thread.

j

My objective is to Stratergise...if that is the right word....My forex trading...not by reading 100's of books but use the existing information and Prepare the perfect trading plan...
The elements of My trading plan will be..
1.Seasonal
2.Trading Methodology...I have a few...but would like to stick to one....
I will be discussing these as well....
 
Rav - great post... was very interesting reading. Do you trade off the historic trends etc soley or do you just use the info to maximise your stratergy, i.e. may is a down month, so do you have a bias towards short trades against long ones with your stratergy?

This may be unrelated, but i was looking at one of your attachments which has a 4hr chart. The stratergy I am trying at the moment uses 4 a hour chart. i was wondering what is the significance of the 16:00 candle? The majority of big moves that I can see happen around 16:00 candle... is this because of london closing and US still open?
 
Rav - great post... was very interesting reading. Do you trade off the historic trends etc soley or do you just use the info to maximise your stratergy, i.e. may is a down month, so do you have a bias towards short trades against long ones with your stratergy?

This may be unrelated, but i was looking at one of your attachments which has a 4hr chart. The stratergy I am trying at the moment uses 4 a hour chart. i was wondering what is the significance of the 16:00 candle? The majority of big moves that I can see happen around 16:00 candle... is this because of london closing and US still open?

Hi Madmax,
I have been looking at seasonal patterns for quite a couple of years now but this gives you the edge as in if you know that in a particular month they tend to be bear then you can adapt you bearish attitude towards you trade...I am a natural bear.. I short the market more than I go long so I look at reversals and pullback to fib levels quite a bit...

Saying that though just use these patterns as guidelines...I got severly burnt last year on the dow as every october the dow falls about 300 points and this october it did something totally different....So you should base you trades and adapt you stratergy accordingly.....But I have definately will proove that these forex patterns do work...
....
 
Rav, how is it possible to be a bear in forex? every currency is linked to every currency...selling one and buying another....I think I know what you mean but not quite sure

cv
 
CV....
Let me put it this way I am a shorter.... short seller no matter what market I go into...
I guess you are refering to a trend trading bear and that is not what I mean...
apologies for the confusion...
My positions are 90% short and only 10% long
 
Hi Madmax,
I have been looking at seasonal patterns for quite a couple of years now but this gives you the edge as in if you know that in a particular month they tend to be bear then you can adapt you bearish attitude towards you trade...I am a natural bear.. I short the market more than I go long so I look at reversals and pullback to fib levels quite a bit...

Saying that though just use these patterns as guidelines...I got severly burnt last year on the dow as every october the dow falls about 300 points and this october it did something totally different....So you should base you trades and adapt you stratergy accordingly.....But I have definately will proove that these forex patterns do work...
....

Rav, you mentioned that you got stung on the dow last year... how often does the seasonal info prove incorrect? Not sure you can answer the question, but am intrigued. i.e. if you look what happened in each of the last 12 months, how did that compare to historical data? The pip different is irrelevant I guess, its more for example if historic data says 6 out of 12 months say bear (not sure of actual data), and how many of them were actually bear

m
 
One of the reasons why T2W works for me...

Speculate to accumulate on Forex but watch those patterns.
Forex Trading Profits From Calendar Patterns by: John Forman
Most traders have heard of seasonal patterns, something which is mostly associated with commodities. The foreign exchange market also has calendar patterns which influence trading, and just like in commodities, traders can take advantage of them
to improve their odds for success and profits.

Monthly Patterns

Nearly all currency pairs have one or more months during which they have a directional tendency. There are three pairs in particular which have traded in the same direction during a particular month at least seven years in a row. AUD/JPY has risen in January, while USD/CAD has fallen in June and USD/JPY has dropped in August. In each case, the moves have been significant. Let’s take a look at USD/JPY as an example.

On average, USD/JPY has declined over 325 points each year since 1999 in the month of August, which translates to 2.80%. While the percentage does not seem extraordinary, when one takes leverage in to consideration, it is a different story. Had one shorted 100,000 USD/JPY at the start of each August and closed that position out at the end of the month, the total profit would have been in excess of $20,000 (not taking in to account interest carry). That is an outstanding return considering the margin requirement for a position like that is only $2,000. And this does not even consider compounding!

Weekday Patterns

For the short-term trader, there are also patterns of behavior which are based on weekdays. It is a little more complicated, however, than just saying buy or sell on Monday, for example. A secondary condition must be applied, which can be accomplished using the month. The result is patterns which take place on certain weekdays during a given month.

An example of this kind of pattern is GBP/USD on Mondays in December. The pound has risen 73% of the time on Monday during the last month of the year since 1999 (31 observations). The average move has been 40 pips. Assuming a 5 pip spread, a trader who entered traded this pattern over the last seven years would have booked over 1000 pips in profits, which translates to more than $10,000 if one took positions of 100,000 GBP/USD each time.

Trading the Patterns

The examples outlined above are just a couple of the patterns which can be found in the Forex market. There are many worth incorporating in to one’s trading. Obviously, one strategy which could be employed is a simple enter-and-hold based on the pattern for a given month or weekday. That, however, does leave one open to the both in-trade draw downs, some of which can be substantial, and the simple fact that patterns do not always repeat every time, and sometimes change.

An alternative to enter-and-hold is to use calendar patterns to bias one’s trading. For example, a day trader could look for opportunities to buy in to weakness in GBP/USD on Mondays in December. Similarly, a swing trader could use short-term breakdowns to enter in to short trades in USD/JPY during August.

The trader looking to employ Forex calendar patterns must utilize the same good risk procedures as are always necessary. This applies regardless of the strategy employed.

There is, of course, no such thing as a 'certainty' in speculation of any sort. Never gamble what you cannot afford to lose and take professional advice or abstain if in doubt.

Cheers Rav :cheesy:

Hs
 
How To Increase Forex Profits 100% in 10 Minutes
This simple exercise will increase Forex profits 100% and works for 99% of all short-term FX traders – stop trading so much – widen out your stops – widen out your profit targets – and only trade in the direction of the trend indicated by 4 hour chart.

1) Stop trading so much
Sure there are no commissions but the spreads are HUGE and believe it or not (well you’ll believe it after you do the simple exercise below) the spreads are reducing your profits 100%!

2) Widen out your stops
Initial stop loss should be a minimum of 23 points; I use between 23 and 35 point stop losses for short-term trading.

3) Widen out your profit targets
Unless you think a trade can make you 100 points or more don’t do it.

4) Only trade in the direction of the 4 hour chart
The real money is made in the direction of the trend

Simple exercise

1) Download all your trades for the year into an excel spreadsheet (if you don’t know how to do this ask your broker for help).

2) Determine the dollar value of the spread for each trade.

3) Sum up the total dollar value of all spreads for all trades and add this number it to your current account balance; this is your spread adjusted account balance.

4) Take your spread adjusted current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.

5) Take your actual current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.

6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.

7) That number should be 100% or more

8) Take the necessary steps as outlined above (1 to 4) and improve your results 100%
 
Lots more to come on this thread from myself.....Get ready for good pointers from monday...I am going to try and post some seasonal trades
 
Let Make a start....with GBP\USD

What can we understand from this seasonal pattern that...now is the time to buy...just my thoughts I guess...
We have had a wonderful move down to bring most indicators into oversold for last week...So How do we trade this......

Current Status of Cable:
My Stochs....over sold on 4HRLYs.....Good sign
My ATR....10.pts @ 58 above Neutral at present which means a big move is .
So if in september we are suppose to see a move up towards the mid then this is the best time...
When Trading patterns...My view is have a target of 100 pips per Seasonal trade atleast..
I am looking at the Fibs from 28th of august and they have bounced exactly of the the 78.6 Zone so....We have a good chance of making the 100 pips required....I think.

I will be going long on market open price....My risk value is very minimal ie 40 pips...

so a hard stop @ 2.0030
An order in at 2.0070 or lower should be just fine....
What else do we look out for....with this trade...
I am taking this trade for definate.....
If anyone else decides to trade this then bear in mind that
Monday's are lazy mondays...so dont expect that much movement
Tuesday and wednesday should do the trick...

My First seasonal trade post.....Please dont risk more than you can afford to loose..I work on stats and knowledge...I am entitled to make mistakes so use my post as guidelines....

Long: :2.0070 or lower
Stop : 2.0030
Target 1: 2.0160
Target 2: 2.0242

Profit makers:Move you stops to breakeven for lots ever 50 pips.....
Newbies : Move your stop to breakeven after 35 pips
The maximum loss on this trade should be 40 pips...

Happy Trading
Rav









I
 

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September....I know it is a bit too late

I know we are in the mid of spetember but here we go some information about pairs and the impact study for the last 7 years.....
 

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I am studying the dow at present...and I am seeing a no further point than 13825 before the end of november......Please feel free to ask me the why's and when' but my fundamental and technical analysis says so...
I want to gain 500 points from dow....yep that is right...
How Will I do this without any stress at all....by getting into the market
13666 is my target short....as soon as it get their....My order will commence...and I my target is 500 points...........
I will post my charts shortly.....(in a day or 2)
I also will trade this live if the moderators permit me to on this very thread...
With day to day updates of my live trading account...Will not be showing any profit and loss figures...
Lets see if we can have a good christmas..........
This is a seasonal trade so please dont mistake this as a intraday scalp.
Thanks
Rav
 
Last edited:
What decision and action will the Fed take through the long lasting US credit crisis?
Will the Fed cut the interest rate as expected? If so, how much, 0.25% or 0.5%?
How about the BoJ? Will the BoJ hold the ongoing interest rate(0.5%) again?
We have many questions. Let's wait and see how things will come out.
This week has many significant events. On schedule we have the BoJ and the Fed with their interest rate decisions, the UK CPI, the UK retail sales, the US CPI, and the Philadelphia Fed.
It is worth noting that The Tokyo Market is closed on Monday Sept 17th due to a Bank Holiday in Japan.
 
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