Market Cycles How To Thrive In Different Market Conditions



Market Cycles: How to​ Thrive in​ Different Market Conditions.
Every market goes through trading cycles .​
There is​ no exception to​ this .​
Be it​ the​ Stock Market, the​ Futures or​ the​ Forex market .​
They all go through different phases .​
In this brief article, I​ wish to​ point out the​ different phases in​ the​ Forex market, identifying which, will help the​ trader know when to​ stay in​ the​ market and​ when to​ stay out .​
Range Days: Historically, it​ has been seen that nearly 80% of​ the​ time, the​ market stays in​ a​ range .​
Range days are when the​ currency stays at​ a​ certain price limit and​ trades within it .​
For example, on​ a​ typical range day, the​ GBPUSD will stay within a​ low of​ 1.9600 to​ a​ high of​ 1.9675 .​
This maybe the​ case for​ a​ day or, at​ times continue the​ whole week before a​ breakout appears .​
This is​ also called as​ “Calm before a​ Storm” .​
Rally Days: Again, historical studies have proved that the​ market rallies only about 20% of​ the​ time and​ when it​ does, it​ creates new trends and​ levels .​
Rally days usually happen when price breaks out of​ the​ range and​ establishes a​ new high or​ low .​
Strange Days: Strange days are those days when the​ market hardly moves at​ all .​
It is​ as​ if​ the​ financial world is​ on​ a​ vacation and​ simply not interested in​ trading .​
This is​ a​ rare phenomenon, yet is​ one of​ the​ phases of​ the​ market .​
Usually, when a​ market is​ well below the​ usual daily range, it​ is​ classified as​ Strange Days .​
Here is​ a​ bit of​ statistics to​ help understand the​ market phases better .​
I​ have listed below, the​ 4 major pairs and​ their daily average range.
GBPUSD - 122 pips Daily Range
EURUSD – 84 pips Daily Range
USDCHF – 96 pips Daily Range
USDJPY – 78 pips Daily Range
In the​ above examples, when a​ pair falls below the​ daily movement, it​ is​ considered to​ be ranging and​ when it​ is​ way below it, it​ is​ considered to​ have entered the​ unknown land .​
If analyzed over a​ week, Range days occur at​ least 3 times a​ week .​
Generally 70-80% of​ the​ Mondays are ranging days .​
Similarly, Rally days occur when price is​ above the​ normal daily range and​ happens only about 20% of​ the​ time in​ a​ week .​
The best day in​ the​ week is​ Tuesday, followed by Wednesday and​ Thursday .​
Tuesday, historically has had the​ best rally days .​
Again, strange days occur less than often, and​ when price stays well below the​ range and​ when there is​ little movement .​
They happen, once or​ twice a​ month and​ are times when one should stay out of​ the​ market .​
Lastly, I​ should add that the​ best days to​ trade are Tuesday and​ Wednesday followed by Thursday and​ the​ days to​ avoid trading are Monday and​ Friday.





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