FOREX ALERTS >>
DailyFX Plus Login

weekly range

Article

Forex Trading Signals Generate Profits on Market Volatility
Monday, 06 October 2008 16:32:19 GMT  |  David Rodriguez, Quantitative Analyst
Delicious
Facebook

Tremendous declines in global equity indices has forced similarly pronounced movements in domestic currencies, and our DailyFX+ Trading Signals continue to outperform on sharp price moves.

Our “Breakout” and “Momentum” trading strategies took full advantage of the Japanese Yen’s impressive strength and presciently sold the US dollar, euro, British Pound, Australian Dollar, and Swiss Franc against the low-yielding Japanese currency. Such elevated levels of currency volatility leave our “Breakout” trading signals in pole position accurately forecast currency movements through near-term trade. As we predicted last week, our “Range” strategies have proven less profitable—taking a big hit on sharp price movements through the week’s forex market open. Our free trial for DailyFX+ forex trading signals will soon end, so be sure to take full advantage of them before the trial window is through.

Trading_Signals_2008-10-02

Forex Automated Trading Signals Outlook

DailyFX+ System Trading Signals – Our “Momentum1”, “Momentum2”, and “Breakout2” have performed very well as of late as impressive market volatility and strong trend moves contribute to the effectiveness of said trading strategies. “Range1” and “Range2” have very much underperformed, as current market conditions bode poorly for strategies that look to trade retracements in calmer markets. Until we see our “Volatility Percentile” drop below 75 percent on the majority of currency pairs, “Breakout2” remains our favored trading strategy. Both “Momentum1” and “Momentum2” likewise remain attractive as currency pairs trade near quarterly highs and lows.

Forex Discretionary Strategy Outlook

Speculative Sentiment Index Trading Signals – Our Speculative Sentiment Index signals have captured respectable profits as of late, but we see that a sharp drop in open interest across major currencies may weaken the strength of individual currency signals. Visit our Forex Trader Sentiment and Positioning Thread on the FX Forum to discuss these signals.

Dynamic Carry Trade Basket – Please see our weekly report on Carry Trades for a better idea on what to expect through short-term trade: Forex Carry Trade Outlook.

DailyFX+ Forex Market Conditions Outlook

Trading_Signals_2008-10-02_1

Definitions

Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past three months of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.  

Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near quarterly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s quarterly range.

Range High – 90-day closing high.

Range Low – 90-day closing low.

Last – Current market price.

Strategy – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.

The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FOREX CAPITAL MARKETS, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FOREX CAPITAL MARKETS, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FOREX CAPITAL MARKETS, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

More Articles

Feedback Form