It is summertime, and this time period (June, July, August) is avoided by most traders as trading ranges and volumes shrink which makes it difficult to make money.
For those who do not want to take a break and wait for September, we prepared few tips and explanations regarding forex trading during summer.
“Sell in May and go away”
On Wall Street and around the world there is a well known strategy “Sell in May and go away”, which is based on the Halloween indicator. The indicator states that most of the market’s gains come in the six months beginning on October 31. Consequently, this mindset results in lower expectations during the summer months.
Nevertheless, if you really want to spend your summer days trading, you should invest time in researching opportunities and avoiding the shortfalls.
This may be a good time to explore other markets or increase your exposure to Australian and New Zealand assets (seasons in the Northern and Southern Hemisphere). An additional suggestion would be to start looking at pairs which are naturally more volatile, and will be less influenced by the lack of information shared by bank traders who are less active during summer holidays. You could also add other instruments, like global indices and commodities. Nikkei 225 and Hang Seng are Asian indices which tend to have consistent volatility.
Best months to trade Forex
Many traders wonder what are the best months to trade Forex. First of all, it is important to emphasize that the whole calendar year is divided into three clear periods of volatility.
The first good period includes these five months – January, February, March, April and May. After these 5 months comes the period of summer lull – June, July and August.
The second good trading period starts with September and ends with November. December is also a good month for trading, however, there is a significant decrease in market activity near the end.