Summer: range market or trending?
Many traders and “experts” say that summertime brings ranging markets, whether they be equities or currencies, or commodities. Hmm, I wonder if this will be the case for this summer? I was looking at past charts from last summer and noticed that the GBPUSD pair trended up about 800 pips from mid June to the end of August. Other currency pairs do range, and yet others trend during the same period. One thing is for sure: summer usually brings less volume, less traders are trading, they may be taking family holidays during this time of year. So caution must be taken when trading forex during the summer months with light volume, very jittery or spikey moves can be common. So how will I trade during these months of low volume? Personally, I want to pay very special attention to trade entries and take quick profits when I can to avoid any sudden market movements that may go against me. For example, I had entered a new buy trade on AUDJPY and the trade got up to about+50 pips during the day. I decided that it was very possible that this pair could retest the previous high at 103.50, so that was my target. I went to bed and in the morning, the trade did not reach my target but had fallen some 30 pips back down, almost to my entry price. I decided to take the profit of +20, but in the future I will try to take profit more quickly and then move on to the next. Summer trading can be tricky, take profits when you can, then you feel better about heading to the beach for the afternoon.Â