Is Forex a Trendy Market
October 3, 2007 by Trader Rich
I was reading an article in the latest Currency Trader Magazine and they tried to prove or disprove that the Forex market has been trendier than other markets. I've heard for years that the currency market is a preferred market by traders because it trends more so I was interested in what conclusion they reached. They compared three currency pairs, the EUR/USD, the GBP/USD, and the USD/JPY with the S&P 500 Index, the 10-year T-note yield, and one NYSE listed stock, Boeing. I'm not going to summarize the article; if you're interested in it, you can download the magazine for free but their conclusion was that the Forex market IS NOT trendier than other markets. In fact, they found the S&P 500 Index and the Boeing stock to be trendier than all three currency pairs. This is interesting considering I always just took others word for this misconception despite never being shown evidence to prove this. If you want to download the October issue of Currency Trader Magazine, you can do so by going to http://www.currencytradermag.com.
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I\’ve been in forex for something like 15 years now. My personal view is that it\’s the most psychological of markets. By that I mean what the market thinks will happen tend to come to pass - self-fulling. Part of this comes from the fact that forex traders can employ leverage at higher ratios, in most cases, than traders in other markets. That tends to allow major moves to run further than they might do in other lower leverage markets.
Frankly speaking, forex is becoming popular and but to say it is trendier now ; i don’t think so.
thanks for the info
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Hmmm…when I traded forex for a few years I felt it wasn’t trendy as much as it was technical. Meaning…if you know how to read charts well, I think you can do better in forex than in the stock market at least.
Chart’s show trends…right?
I think Forex Guy is absolutely right. All markets trend to some extent, but in my experience forex markets conform the best to technical analysis.
That’s interesting because it does seem like people often talk about the trending nature of the fx market, and kind of use it as a selling point. The ranges in some of the currency pairs is dramatic and does offer alot of opportunity - eg gbp/jpy.