How has the volatility and lidquidity changed ?

[khongminhtn]

So I was wondering after doing some back testing all the way back in the year of 2000... I’ve noticed that the price movements are very different compared to now.

Was just wondering how has it all changed since then ? And is it benefiting us at all now ?

 

[NVP]

So I was wondering after doing some back testing all the way back in the year of 2000... I’ve noticed that the price movements are very different compared to now.

Was just wondering how has it all changed since then ? And is it benefiting us at all now ?

can you tell us what you have found ?

 

[khongminhtn]

can you tell us what you have found ?

So as I was backtesting, EUR/USD has a total of 5 digits around the year of 2000, where as now there are a total of 6 digits. Does that mean that the price movements has slown down ?

 

[FXX]

So as I was backtesting, EUR/USD has a total of 5 digits around the year of 2000, where as now there are a total of 6 digits. Does that mean that the price movements has slown down ?

Have you looked at the everage daily range

 

[tomorton]

So as I was backtesting, EUR/USD has a total of 5 digits around the year of 2000, where as now there are a total of 6 digits. Does that mean that the price movements has slown down ?

The number of digits in a decimal number doesn't on its own indicate price has slowed down. For example, a change from 100 to 110 is +10%. A change from 100 to 110.000000000000 is still +10%.

A few years back, brokers and charts started to quote forex with 5 decimal places instead of 4: nothing to do with currency pairs' price action, its just their marketing of their product.

 

[NVP]

i haven’t really looked back over time regarding forex markets and volatility etc etc ......im sure people,will say it was easier the further you go back .....no idea

i suppose when i first started out in early 2000s i was really focused more on intermarket correlation...hence the title of my long siuffereing thread at trade2win

over time i gradually stopped placing so much importance on equities correlations with certain currencies to use as a trigger ...so perhaps that what i think disconnected for me

N

 

[hatemypips]

So I was wondering after doing some back testing all the way back in the year of 2000... I’ve noticed that the price movements are very different compared to now.

Was just wondering how has it all changed since then ? And is it benefiting us at all now ?

QE certainly dumped volatility. Comparing this decade with previous will certainly show that.

 

[khongminhtn]

The number of digits in a decimal number doesn't on its own indicate price has slowed down. For example, a change from 100 to 110 is +10%. A change from 100 to 110.000000000000 is still +10%.

A few years back, brokers and charts started to quote forex with 5 decimal places instead of 4: nothing to do with currency pairs' price action, its just their marketing of their product.

but the exchange rates has changed dramatically.... as of 2000.. 100-200 pips can be moved for example 1.1000 - 1.1200...


but now it has only managed to move around 1.10200 thats only 20 pips or 200 piplettes... hence 5 digits rather than 4.

 

[markallen]

I have certainly noticed a drop in volatility, especially after major fundamentals, like the American Non Farm Payrolls. A few years ago they provoked a much bigger reaction than they do now.

 

[FXX]

I have certainly noticed a drop in volatility, especially after major fundamentals, like the American Non Farm Payrolls. A few years ago they provoked a much bigger reaction than they do now.

That's because employments is not a concern to the fed with the economy being approximately in full employment. A few years ago employment was being closely watched for signs of growth and that's why it resulted in larger moves.

 

[markallen]

That's because employments is not a concern to the fed with the economy being approximately in full employment. A few years ago employment was being closely watched for signs of growth and that's why it resulted in larger moves.

That's a logical explanation, I agree.
I wonder when or whether traders will move onto another fundamental to monitor this closely.

 

[DavidKSawyer]

I have unquestionably seen a drop in instability, particularly after real essentials, similar to the American Non Farm Payrolls. A couple of years back they incited a substantially greater response than they do now.

 

[hatemypips]

I have unquestionably seen a drop in instability, particularly after real essentials, similar to the American Non Farm Payrolls. A couple of years back they incited a substantially greater response than they do now.

Who are you talking about? Market response to NFP? For me it looks the same, year after year

 

[markallen]

I have unquestionably seen a drop in instability, particularly after real essentials, similar to the American Non Farm Payrolls. A couple of years back they incited a substantially greater response than they do now.

The Non-Farm Payrolls seem to barely have an effect on volatility any more, at least most of the time. I remember a few years ago they caused massive spikes, but things have changed.

 

[tomorton]

NFPR's are certainly invisible on a daily chart. Try looking back over the last 18 months and without checking the dates, try and pick out NFPR days.........

 

[markallen]

NFPR's are certainly invisible on a daily chart. Try looking back over the last 18 months and without checking the dates, try and pick out NFPR days.........

I have. There is the occasional noticeable spike, but for the most part you can't differentiate those dates unless you specifically search for them. A few years ago they were clearly visible.

 

[markallen]

I agree. What is more, liquidity and consequently, volatility, often depend on the season. There will likely be more volatility on the market as summer winds down.

 

[markallen]

The problem in recent months has been that there has been less volatility, unfortunately.