Well, we are now into June and that means many things.  First of all, warmer days are here again for the next 3 months at least (depending on where you live of course!) and people start hitting the beach.  Clothes are shed, and those who kept to exercise and a healthy diet during the are rewarded with the confidence that comes from looking good!  It is a time of holidays and bar-b-ques.  It is a time of higher electricity bills and the kids home from school too, much to the chagrin of some people.  But that’s not all Summer entails!!  After all, this site IS called “FOREX Training Academy”, not “Surf City, Here We Come”

When it comes to the markets and trading, Summer also sees changes in this arena too.  Gone are the very high volumes usually associated with Spring and Fall sessions.  Surprised?  Think about it.  Those “big shots” with all the money and power like to enjoy scantily-clad people in exotic beaches just like everyone else, the main difference; though, is that they CAN afford to take THREE months off!!  Whisked away on private jets to undisclosed locations, the players that add so much volume and liquidity, and therefore movement want to take a break from the high pressure of managing billions.  The change in the markets does not only come from people in the financial industry enjoying a bit of a holiday, politicians, who play a key role in both volatility and market movement across the world have much more “downtime” during the Summer.  All these factors can lead to very different markets.

The main change we see is volumes and strength of moves.  Summer, with less activity, tends to create less new areas in forex for price to make a foray into.  In place of the normal breakouts we get ranges instead.  Keep in mind there are no absolutes here, and some Summers we get big breakouts.  But, for most of the time, Summer equals ranging markets.  The traders that are left “working” over the hot months simply push the market down when it gets to the top and bid it up when it gets to the bottom.  Without the extra volume, news flow and players, prices tend to meander, much slower between pre-determined areas.  There can be days of very little movement and it can sometimes be frustrating if you let it be.  Another feature Summer tends to bring to life is that most pairs really work well with technical areas like Fibs, EMAs, trendlines, etc…

I used to dislike Summer trading, but now I love it.  Rather than see the change as a negative, the markets become quite a bit easier to trade most summers.  Again, I am generalizing here and every year I have traded has been slightly different.  First of all, we don’t need to use as large of a stop because there is much less chance that we get severe volatility in the epic battle between the “big” bulls and bears.  We also don’t have to worry about politicians making any really dramatic announcements that will really change the course of any given pair.  They tend to save those things for the heavy-volume periods like Fall (many election times then) and Spring.  Second, since technical areas tend to work really well, we can “map” out the potential trades very well ahead of time.  Finally, since things tend to happen slower, it is easier to pick up on moves as they are happening rather than see them rush on without you getting to get some of the action.

All that said, we must slightly modify our approach and mindset as well.  During our higher-volume periods of the year, we are constantly on the hunt for that 10:1 R/R trade that bags hundreds of pips.  We look for the big breakouts and see how far we can take our trades.  In the Summer, since very little of that is happening, we must make our goals more fitting for the situation.  We take our trades “point to point” from one area of S/R to the next and that’s all.  Instead of worrying about the trend, we attempt to identify the best structure of the range.  Sell at the top, and buy at the bottom.  Simple, mechanical and effective.  Small stops, modest take profits.  Although we always should keep an open mind in regards with trade bias, during the Summer we must assume that price will stop and reverse through the range.

Productive trading doesn’t always have to come from big, dramatic moves.  Identifying what makes the markets “tick” at various times of the year should always have us trading most effectively. Keeping all of the above factors in mind, we can turn a slower Summer into an account sizzler!