That’s ok. Forgiven and forgotten. Anything else is just a distraction in our world!
[quote=“RISKonFX, post:304, topic:83773, full:true”]
I’m curious Manxx, we all hear the supposed expression during the current time of the year being “summer doldrums”; quite simply relating to reduced volume and increased potential volatility as a result. Do you see any differences relating to the crude oil markets? As a pure FX trader I’m curious on your opinion.[/quote]
This is an interesting and relevant issue. But firstly, I have to remind that it is only about 5 months ago that I stepped off the well-trodden, familiar tracks of the forex path onto the slippery slide into the black, slimy pits of Crude Oil! I haven’t previously traded through even one summer period of oil, so take what I say here with the appropriate degree of caution/skepticism!!!
I have so far realised that CL does have a very different character to most forex pairs but the same TA principles seem to work here as in forex, maybe even more reliably - and I think there is a reason for this.
If you look at the chart below, I have marked the July/August weeks since 2008, that’s nine years/summers and I don’t see any particularly significant slowdown during these summer months. Of course, weekly charts do not show any change in daily or intraday volatility, fluctuations or volumes.
I also think that maybe oil is a different beast to forex. It is a more tangible, concrete, visible commodity than forex, with a much longer production cycle from exploration through drilling, transporting, refining, more transporting, storage, more transporting, to eventual final consumption. The factors affecting supply are naturally very significant but again are long-term in being realised. On the other side, demand factors are probably very similar to those affecting forex, except that maybe the summer season has some additional consumption pressures relating to, for example, the tourist industry and travel. Also, the warm summers of the northern hemisphere are the cold winters of the southern hemisphere and heating/energy needs continue.
Another difference is that oil is focused on one specific industry along with all its individual components, and the entire industry is watching the same factors and reacts as a whole to any events whether it is summer or not. Whereas forex is the result of an entire blend of interrelated industries, economies and politics and therefore perhaps more vague when trying to visualise what is actually going on with any given currency pair.
The oil market is huge, as is the forex market, and clearly has an enormous speculative element, just like the forex market, but I get the feeling that a bigger proportion of the speculative parties in oil are more commercial, industrial, institutional, and national than with forex, and therefore a larger proportion of these views are, as a result, longer term in nature. Which means exposure monitoring is a continuous process regardless of seasons.
In an nutshell, oil is a commodity every person, every industry and every nation needs regardless of the season. Forex also continues all year round in the real world of actual commercial transactions but the speculative element maybe finds it easier to take a break and relax with its winnings for a few weeks in the sun!