We are pioneering a method of trading the Forex using the Average Directional Index (ADX). We are beginning to see some results. Starting with an initial investment of $5,000 in early April we're up 60% to $8,000 thus far - just four trading sessions later. I detailed in an earlier article the basics of the ADX. It's a trend identification indicator...and it tells the strength of that trend as well. It's not science, not an art...more of a craft. There are some variables: which currency to trade, what hours of the day to trade, which timeframe to trade, which settings to use, where to set profit targets and so on. This approach does take a modicum of time and attention from the trader. It is not a set-and-forget system as the many purveyors of the latest and greatest Expert Advisor claim their system offers. I have yet to see an EA that does not eventually fail. It is far better to spend a few hours a days focusing on your trading than depend on a robot to handle the whole matter for you.
Of all the currencies, the Euro is the most liquid - although liquidity is hardly a problem in a market with a daily trading volume of nearly $4 trillion, according to the Bank of International Settlements. The London market accounts for roughly 36% of global currency trading, New York 16% and Tokyo about 6%. Another chunk is traded in derivatives such as futures contracts. Among the banks Deutsche Bank is the king with almost 22% of the market, then Swiss UBS with nearly 16%. In addition to these the top ten are rounded out by three British banks and five US banks.
The most active hours for the Euro are when the London and New York markets are both open. Normally London is five hours ahead of New York, and the European continent (France, Germany) is six hours ahead of NYC. However, Europe does not go onto and off of Daylight Savings Time at the exact same time that the US does...so there is a short period when the time difference between London and NYC is only four hours. In any event, you are safe to assume that from roughly 8 am eastern time to about noon eastern time (US) will be the period when the Euro is being traded in both London and New York...and hence see the most active trading. There have also been studies done to pinpoint what day of the week trends most often begin. We'll address this in a subsequent article.
For evidence of how this ADX trading methodology is working in practice...we invite you to visit our blog to see charts and data of trading results.
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