Currency markets are forever in a state of flux and rates of all currencies keep ticking up and down 24 hours.
Therefore, before applying a strategy to currency trading in India (where we are), it makes sense to figure out periods of activity and inactivity.
ACTIVITY IN THE GLOBAL CURRENCY MARKETS
About 70% of the trades happen when USA and Europe are open – after 7 PM India time. At this time India is closed (it is open between 9 AM and 5 PM).
25% of the trades happen when Asia (including India) and/or Europe are open.
5% of the trades are during inactive hours.
Therefore, if you are trading currencies in India, it makes sense to adopt different calculations in 2 timezones:
- When Asia and India markets are open
- When Europe and India markets are open
You also should take cues when
- Only Asia (minus India) is open
- Only USA (minus other centers, but including when Australia and Canada are open)
TRADING STRATEGY TO FOLLOW
Use this 15 minute candle strategy. But don’t use it for BTST, square up positions intra day.
The backtest was conducted on 10 September 2018 (all timezones) and 11 September 2018 (Asia timezone). Here are the results:
1: India Currency Market Opens (Rest of Asia Major Markets are already open)
2: Europe Opens (India is already open while Rest of Asia Major Markets have closed)
3: USA Currency Market Opens (Asia including India are closed, Europe is open)
4: Asia Currency Market Opens (India, USA and Europe are closed)
That’s it. Try out this strategy on paper and check if it works. Remember that currency trading is not as risky as equity trading (1 lot of US/EUR is 1000 and the movement is not huge, unlike in stocks. Good luck.