Author Bio

FXstreet.com is organizing a special webinar together with Currensee Trade Leader Taylor Growth, tomorrow Thursday at 15 GMT / 10 am EST!

In this webinar Tom Dawson and Josh Colton from Taylor Growth will discuss how a high degree of leverage can work against you as well as for you. Josh and Tom will discuss the risk/reward tradeoff, the importance of establishing your investment objectives and balancing your objectives with your appetite for risk.

Gift for attendees!

A special limited-time webinar promotion will be offered to all attendees of this webinar by Liquid Markets!
Details regarding this promotion will be announced at the webinar including eligibility, enrollment and terms & conditions. Don’t miss out!

REGISTER NOW!

If you never attended a webinar before on FXstreet.com, make sure to read our instructions.

Taylor Growth Company is a privately held financial services firm that was founded in April 2007 to develop long term savings and investment programs as alternatives to the stock market. We specialize in spot foreign exchange (Forex) currency trading. Investors have a choice of investment strategies at Taylor Growth Company. Taylor Growth Company is a member of the National Futures Association (NFA), and adheres to NFA guidelines and ethics. NFA # 0405331

The Currensee Trade Leaders™ Investment Program is the unique autotrading service that delivers a select network of emerging foreign exchange managers, called Trade Leaders. Once you open and fund your account, you simply choose the Trade Leaders you want to follow by adding them to your portfolio. By joining the program, you leverage sophisticated technology that replicates the trades of a Trade Leader in your account in real-time, regardless of where you are in the
world.

REGISTER FOR TOMORROW’S WEBINAR ON FXSTREET.COM

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

A few weeks ago, one of our contributing writers, John Forman, posted on when the best time of day to trade Forex was. The question was inspired by the Q&A session of our last Trade Leader webinar featuring Currensee’s Taylor Growth, who explained the benefits of using a conservative Forex trading strategy.

Recently, we were able to get some insight on this question from another Trade Leader; Gabor, Asirikuy Trading. Gabor trades using a technical strategy based on indicators such as Chart Patterns, Bollinger Band, RSI, Stochastics.

Gabor says:

“It depends on the currency pair. The rule of thumb is that the bigger the liquidity of the market, the better to trade it. Liquidity is changing during the day even for heavily traded pairs. E.g. the London session is considered to be the best time to trade the European majors (EURUSD, GBPUSD, USDCHF). Big liquidity does not necessarily mean directional price movement – we can experience the formation of congestion zones many times during liquid hours. But when balance between bulls and bears is broken during a highly liquid period, chances are that it is going to be a meaningful movement, the beginning of a trend.

To support my statement, I examined one of the short-term trend following systems that I trade at Currensee.

It’s a momentum-based strategy, which trades the H1 EURUSD. If price momentum reaches a certain threshold, the system opens a market order in the direction of the momentum. In other words, if the open/close of the hourly candle is bigger than a preset % of the daily volatility, we enter the market. I ran a simulation of 12-year price data and then grouped the market entries by hour. The result is shown on the chart.



As you can see, most entries are in the overlap of the European / US sessions which starts in the range of 1 p.m. GMT (New York) – 2 p.m GMT (Chicago). This lasts to the last hour of the London/Frankfurt session,  5 p.m. GMT. The Asian / European overlap is the second most busy period from 8 a.m to 10 a.m GMT.”

It is interesting to compare this response to that given by Trade Leader Taylor Growth. Since he is a range trader, he feels that the lower trading volume in the NY afternoon, Asian, and early-European sessions yield the highest success rates. He explained that the best time of day to trade really depends on the strategy the trader is using. Since his conservative strategy is very technical, it fares better in Asian sessions when trading European pairs. Since it’s nighttime in Europe while the Asian markets are most active, no European news releases are making their way out and influencing trades.

To see how these two Trade Leaders’ trading strategies have been working for them, check out the Leaderboard.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

In the webinar a couple weeks ago a question came up from one of the attendees as to when the best time of day is to trade. This is a question that comes up a lot among forex day traders, though obviously most folks who seek to operate in that arena are constrained by the time zone in which they live. I’m going to present two distinctly different answers to the question – ones that contradict each other.

First, conventional wisdom
When the question of best time of day comes up the answer often put forward is the London/New York overlap period. The reason here is a combination of volume and volatility. London is the center with the highest average forex market trading volume, and New York comes in second (see The Most Traded Currency Pairs for specifics on which pairs are the most active globally and across regions). As such, there is maximum liquidity during this time of day for the major traded currency pairs.

On the volatility side of things the London/NY overlap is also the period when many of the most significant data releases and news items are released. Obviously, the NY morning is when most US data headlines post. Most UK and European data hits before NY gets going, but central bank statements and press conferences do happen in the NY morning. Also, key speakers often have their comments crossing the wires during the overlap period. In other words, there is a lot of news and data to move the markets and create volatility.

Thus, the London/NY overlap period offers volatility and liquidity, which many folk see as keys for worthwhile day trading. But wait!

Performance reality
The folks at DailyFX did a study a few months back looking at the performance of FXCM clients based on the time of day they traded. The results they came up with were entirely contradictory to the conventional wisdom noted above. They argue that it’s the lower volume NY afternoon, Asian, and early-European sessions which see the best trader performance.

Why so?

The author’s argument is that most individual traders tend toward a range-trading approach. This style of trading is ill-suited to volatile markets. As such, the news and data induced volatility we see in the London/NY overlap period is actually a negative for trading in the major pairs. They include a graph which shows a clear trough in the success rates of trades in the NY morning and another that shows the relative volatility peaks at that time of day.

Now, as I wrote in Optimize trading performance by time of day selection, there are some issues with the DailyFX article in its focus on win % as its main metric. The authors did include some system performance figures which provide some more results to back up the overall premise, though. As a result, I think it’s worth at least taking a very hard look at how your trading would do in different time frames during the day.

Makes you have to start wondering about conventional wisdom, doesn’t it? It should also have you thinking about opportunities to diversify your trading time of day. This may not be something you can do yourself because of your available time and locale, but using an autotrading system might offer you an opportunity to do so.

Editor’s Note: Originally derived from the webinar, the question examining what time of day is best to trade Forex had been answered by Trade Leader Taylor Growth during the Q&A session. Since he is a range trader himself, his response was congruent with the second part of the above answer, which leans towards the lower volume NY afternoon, Asian, and early-European sessions as yielding the highest trading success rates.

Taylor Growth explained that the best time of day to trade really depends on the strategy the trader is using. Since his conservative strategy is very technical, he believes it fares better in Asian sessions when trading European pairs. Since it is nighttime in Europe while the Asian markets are most active, no European news releases are making their way out and influencing trades.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

Last week’s webinar session featuring Currensee Trade Leader Taylor Growth delivered strong information on a “conservative” trading strategy and its pertinence to these current tempestuous market times. The concepts touched upon and insight provided could be quite useful to anyone involved in Forex, so I thought I would share some of what was revealed.

With a historical success rate in the high 90’s and currently up 1.5% this month, Taylor Growth seems to be doing something right. Tom Dawson, COO at Taylor Growth who spoke on the company’s behalf, attributes this success to a few key concepts: preparation is integral, you must consider multiple sources of influence like technology and the economy, and you need to have rules and systems you believe in.  Not long ago, the world of Forex was something new and uncharted – an environment he compared to the Wild West.

“There was a need for a conservative, careful, and productive company. One that was going to do a good job in producing real results that were accessible to people,” Dawson explained. He went on to say how it’s easy for someone with millions of dollars to achieve world-class results in Forex, but it’s a completely different story when you can only put 10K into the market, and that is why skilled traders are needed to help in attaining these results. Dawson finds solace in knowing that even though it may not seem it, there is in fact consistency in foreign exchange.

“One of the great things about Forex is that every month, companies all over the world have to move their money to do things like pay rent, etc. It’s the daily moving of this $4-5T that acts as a stabilizer bringing things back to equilibrium,” he explained.

By using range trading and understanding that over time, there will be various ebbs and flows in Forex, Dawson sees that no matter where a currency goes, it will usually always return back to its point of origin. This general paradigm of consistency is what inspired Taylor Growth’s goal of being able to achieve the highest risk adjusted return possible while producing smooth results – or, as Dawson put it, “taking the chop out”.

He explained how the use of Pattern Recognition when looking at what’s going on in the marketplace allows this consistency to actually be seen. It becomes apparent that there are repeatable, definitive patterns that occur, such as how the dollar is stronger and weaker at different times of the month. Taylor Growth has seen such a high success rate because they pay close attention to these patterns and base their decisions on them, which is something that’s hard for a computer to do.

Even with Taylor Growth’s scrupulous attention to macroeconomic detail, there will always be some degree of risk. Knowing this, he’s formulated a few ways he believes are the most secure for protecting investors from losses. Setting automated stops is not something Taylor Growth generally practices. Instead, when things start moving against them, they cut the trade themselves as a means of managing risk. By using a balanced combination of betting small, understanding which patterns are in confluence with them, and being comfortable with taking a loss when a trade moves within several hundred pips, Taylor Growth has achieved a historical success rate in the high 90’s. On larger trades, however, they do set hard stops to abstain from risking more than 1%.

One deterrent of automatic stop losses Dawson touched on was the way they can react to a Flash Crash.

“Problems can arise when a market is thinly traded at a particular time and if it moves up or down 200-300 pips, you run the risk of losing the trade because of the stop, even though you were correct. If the stop weren’t on, you would have eventually won the trade,” he explained.

The webinar was concluded with a Q&A session that touched on topics such as stop hunting, among others. Our next webinar will be taking place Wednesday, May 9^th 2012, 12:00pm ET / 6:00pm CET where CEO Dave Lemont will reveal five secrets of investing in the growing Forex market – sign up here.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

It has been quite an exciting day here at Currensee as we’ve been receiving generous coverage on a press release published this morning by the Wall Street Journal’s Market Watch. The premise of the piece highlighted how Currensee’s Trade Leader Investment Program has grown to include over 100 institutional partners who are currently offering the program to their investors and clients.

It is interesting to look back over the timeline beginning at the programs initial inception back in October of 2010, when it was available only to retail investors. It wasn’t until roughly a year later that we started providing institutional investors the option of offering the program to their clients, which include asset managers, hedge funds, family offices, introducing brokers, and other financial institutions.

The press release also illustrated how the relatively new realm of online trading platforms are reshaping the way trading happens by allowing investors some degree more control. Javier Paz, senior analyst of Aite Group, explains some components that have contributed to the monumental shifts in forex trading.

“The abundant liquidity of the Forex markets has given rise to a new breed of professional-level traders. This development, along with the popularization of trade-replication technology and prudent copy-trading rules, are the biggest developments in institutional investing since the creation of hedge funds.”

The press release definitely brings into perspective just how much this facet of trading is adapting to available technology as a means of improving the way forex investors navigate the world currency markets. Thank you so much to MarketWatch, Elite Group, and the many others who found this information worthy of posting on their blogs and sites – we really appreciate it! Find the full press release here.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

This is our fifth and final installment of the trade leader interview series. In this post we ask three of our Trade Leaders what they think about volatility, trading strategies and the Euro. The traders are Janus Investments (Ticker: JASMI.I), Chen Investments (Ticker: CHCMP.S) and BAK Trading (Ticker: TCBRF.A).

1. Do you believe 2012 will be as volatile as the end of 2011?

Janus: 2012 will bring more volatility than 2011, but in a smaller range than 2010 and 2011, because central banks will intervene to dampen volatility trying to set upper and lower boundaries.

Chen: Yes, it will be more volatile.

BAK: Yes, but volatility will only be 60-80% as 2011′s ending months. The most volatile period is probably already over.

2. What types of Forex strategies will continue to prevail in 2012?

Janus: A portfolio of different non-correlated strategies will work in any market.

Chen: I think any strategies which can live well in 2011 will still have a chance in 2012, but we have to adjust our strategies to suit a riskier market.

BAK: Scalping and swing. Position trading will not prevail in 2012.

3. What would a breakup of the euro mean for your strategy?

Janus: No change, our strategies are not based on long-term trends (monthly, yearly), but on short-term price action (intraday).

Chen: This is something tough for us to think about. I feel the only thing a trader can do is have proper “stop losses” in place.

BAK: Not much as I only focus on ultra short-term changes of major pairs. The Euro currency should still be around, at least for Germany, France, and a few other countries.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

This is the fourth installment of our trader interview series.  Currensee Trade Leader Adantia LLC (Ticker: ROCED.A) uses strategy that stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators. Adantia lets the software do all the work but plays close attention to the events that may impact the strategy so they can see how the model reacts.  Over the past two years we have experienced a number of “shocks” including the Flash Crash, the Japanese Tsunami, Quantitative Easing I, II and III, North Korea shelling Yeonpyeong Island, etc. and Adantia’s Foreign Exchange Volatility Strategy has performed well and adapted to these shocks.

Do you believe 2012 will be as volatile as the end of 2011?

Yes, most of the issues that have contributed to the volatility have not been resolved and will take considerable time and effort before they are resolved:

• The Eurozone crisis is still in full swing.  Greece, Spain, Italy and Ireland have significant issues which will drag on the EUR for some time.  The new governments in Italy and Spain seem to be taking some of the right steps, but there is still much uncertainty.
• The Middle East is a mess.  Iran is working to become a global nuclear power, the U.S. has pulled out of Iraq and the succession of the leadership in Saudi Arabia is now in doubt.  The world still runs on oil and all of this uncertainty can rip around the markets.
• North Korea is more of a wild card than ever.  The world knew Kim Jong Il pretty well after all of his time as the Supreme Leader.  Kim Jong Un is a virtual unknown, and the country is not getting any healthier from an economic standpoint.  This could be very bad news for South Korea and ultimately most of the world.
• In the U.S. we have an election going on, so much will be done to spur on the U.S. economy so that the current leaders can get re-elected, BUT, many of the problems that we have in the U.S. are just being kicked down the road for the next leader to handle.  I expect employment numbers will get better throughout the year which will have a positive impact.  The partisan fighting in Congress will cause significant tension in the U.S. markets and if the leaders don’t come up with solutions then the markets are going to react.  Also, it will be interesting to see what the climate is for regulation in the U.S.  With the collapse of MF Global, U.S. Regulators could clamp down, which will have an impact on the markets as well. The Real Estate crisis in the U.S. is far from over.  The Banks own a lot of property that has yet to hit the markets and this will have a big impact as well.  Will Real Estate ever be a safe investment?

2. What types of Forex strategies will continue to prevail in 2012?

At Adantia, we think our strategy is well positioned to take advantage of the volatility that is inherent in the market.  We have been very successful over the past two years taking advantage of the tumultuous market.  We also believe that a well-diversified portfolio is a wise choice.  Alternative asset classes like FOREX can be a very important part of any portfolio and can produce returns that are not correlated to other investment types.  Within FOREX we believe investors should look to diversify using complimentary strategies.  Our Foreign Exchange Volatility Strategy tends to be counter-trend and is well complimented by trend following strategies.

3. What would a breakup of the euro mean for your strategy

Personally, I do not believe the Euro will break up.  I believe Germany and France will do whatever it takes to keep the European Union together.  The German people very successfully combined East and West Germany, and while that process was very painful, in the end they came out much stronger.  This is a different economic battle with many more countries involved, and it will be very painful, but, in the end the whole region will be stronger if the European Union is maintained.  The EUR/USD pair is a big part of our current strategy, so if the Euro were to break up we would have to remove that pair from our strategy.  We are confident that with research we could replace this pair, but it would take some time. No one can predict the future, so investors would do well to diversify and monitor their portfolios closely.  It is important when selecting different managers to make sure you are not getting too much overlap in the strategies the managers are using to truly diversify your portfolio.  This means the investors will have to do some legwork to understand the strategies the managers are using to get the returns.  Here’s hoping 2012 is a great year for everyone!

Next week: Janus Trading (JASMI.A), Chen Investments (CHCMP.S) & Bak Trading (TCBRF.A)

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

After a very successful webinar with Adantia LLC, we couldn’t wait to invite co-founder Brad Kuhlin to the Currensee office to find out more about their trading strategy. Brad let us in on a few secrets of Adantia’s stop loss strategy, an impressive three-stop system. The first video includes additional information on Adantia’s trading approach and their special stop loss strategy. In the coming weeks, we will add three additional videos to this post. Adantia trades under the ROCED.A ticker and has outstanding risk adjusted returns since becoming a Currensee Trade Leader.

Adantia LLC Interview Introduction from Team Currensee on Vimeo.

Predictions on volatility in 2012:

What forex strategies will prevail in 2012:

Comments on the Euro breaking up:

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

This is the second post on our trader interview series. Currensee Trade Leader TCM Spencer Beezley (Ticker: SPBJP.A) uses a simple, common sense approach that adheres to strict money management and uses proven trading techniques. He mainly trades the major pairs and always uses stop losses. Trades are usually closed long before the stop loss is triggered due to a dynamic time based exit that reduces overall exposure to the markets. TCM Spencer Beezley uses a breakout and scalping strategy as the two main strategies traded on this account. He opens up to five positions at a time and always maintains a low amount of leverage per position.

Do you believe 2012 will be as volatile as the end of 2011 has been?

I believe volatility will continue to be high due to the many unresolved issues that much of the world is still facing or has yet to face.  When we see news and rumor affecting currency pairs to the degree we’ve seen in much of 2011, you have to consider how much is still yet to come in the attempt for resolve in these issues. With weak fiscal policy or short term fixes that ‘kicks the can further down the road’, the market thrives off any relevant news resulting in higher volatility.

What types of Forex strategies will continue to prevail in 2012?

The types of Forex strategies I believe will always have a chance of prevailing are ones that can be stable in a multitude of market conditions, use a tight stop loss, and do not rely on high degrees of leverage to be successful.  It is also important to have a diverse mix of strategies to help smooth out the equity curve when one or more of the strategies is experience periods of slight drawdown.  I prefer also to hold trades short-term to reduce overall market exposure and being liquid by the end of the week.

What would a breakup of the euro mean for your strategy?

In my strategy, the EURUSD is the currency pair that I trade the most.  I am always working in the background to identify new trading strategies that trade different currency pairs.  As a Forex trader, it is always important to be prepared for shifts in the market and to be able to accommodate for those shifts as seamlessly as possible.

Next week: JLFX Network  (Ticker: JOLSU.G)

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

We sat with our Currensee Trade Leaders and asked them three questions on volatility, trading strategy and the euro. The interviews give a brief glimpse inside the minds of our traders and shines some light on the coming year. The first post in this series starts off with Gabor Asirikuy Trading.

Currensee Trade Leader Gabor Asirikuy Trading (Ticker: GAFLL.B and GAFLL.C) uses a distinctive automated system that leverages the signals of 10 trend-following trading systems, each leveraging different trading tactics. The system leverages the work of an international trading community that analyzes systems using purely statistical methods, and is built to take advantage of the long-term investment horizon. The system is built on the foundation of the Turtle Trading System, with volatility adjusted profit/stop targets and position sizing.

Do you believe 2012 will be as volatile as the end of 2011 has been?

The global economy is not in a good shape at the moment and probably this will be the situation for the whole year. Usually markets are less volatile when investors are optimistic and central banks gradually increase interest rates. This kind of environment usually starts carry trading in the currency markets.

However, 2012 is probably not about that, especially if Europe does not manage to find a credible solution for the sovereign debt problems. The solution would need the member countries to partly give up their political sovereignty, which is a very hard decision for them and won’t happen overnight. If the EU debt crisis extends and the EU finally breaks up, then that might lead to a quite chaotic situation in the financial markets. This would surely increase volatility as investors would escape to safe haven currencies.

Elections in the US and France won’t help either, because world leaders will be more concerned with domestic political battles then with the global economy.

On the other hand as a systematic trader I can only say that future is unknown and instead of predictions I keep looking at the statistical numbers of my systems, trade consistently and manage risk properly.

What types of Forex strategies will continue to prevail in 2012?

Well, that’s hard to answer, carry trade probably won’t for the reasons listed above. However a trader had better not to try to predict market conditions, but to trade strategies that can survive the unfavorable periods, which always come sooner or later. Some markets/periods are better for trend following systems and others for counter-trending (or mean reversion) systems, but that might change over time. Consistency and risk management are the keys.

At Currensee, I trade short-term trend following systems (H1 swing trading) on the major pairs. Major currency pairs tend to build up larger trends, because they are rather moved by global fundamental events than speculation, so for that reason trend following seems to be more apt for these instruments. But this doesn’t mean that range bounded periods would not come from time to time even during volatile periods.

What would a breakup of the euro mean for your strategy?

This is an interesting question, indeed. It already occurred at Asirikuy before, and we made experiments to model this problem. The introduction of the euro in 1999 gives us the opportunity to model the impact of an instrument change. We created a few daily trading systems with the help of our genetic algorithm framework, that were optimized on the historical price data of the DEM/USD pair during the 1990 – 1999 period. These systems were then backtested on EUR/USD from 2000-2010. Those systems that were stable during the original optimization period – which means that their performance didn’t deteriorate dramatically when we changed slightly their entry/exit parameters or the spread – did well on EUR/USD in the 2000-2010 out-of-sample period, in fact most of them did a bit better.

What that means is that before 2000 it was the Deutsch mark which represented the best the economic performance of the continental Europe, no wonder that Germany is called the economic engine of the EU. After the birth of the euro the characteristics of the market didn’t change much: the same traders in the same institutions / banks / corporations in the same time zone speculated or hedged on fundamental events of the same economic conglomerate. In addition the EUR/USD became more liquid than the DEM/USD, which means that technical trading works a bit better in this market.

The same can be assumed in the opposite process when euro ceases to exist. The economic environment won’t change dramatically, but the new currency (maybe the euro of a smaller group of countries or the Deutsch mark) will be less liquid, so technicals will work less, and this might mean slightly worse performance.

Of course if the breakup happens in a chaotic manner that might mean that the new currency pair will not be accessible for the retail traders for some time. In that regard we don’t have experience – and I personally would be glad not to have one – but time will tell.

Next week: TCM Spencer Beezley (Ticker: SPBJP.A)

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.