Forex

Seasonality of Forex Trade

Most traders use short time gaps to generate profits and try to close deals within one day.

But there are such who prefer a more relaxed pace of work. Preferring medium and long-term transactions, trading almost without using leverage.

It is the latter that should take into account in your work such a factor as “Seasonality”, sometimes it allows you to earn quite well in just a few months.

What is the seasonality of exchange trading?

First, you should start with the tools that are concerned with this aspect. Because not all assets are affected by the time of year.

It is not desirable to use such instruments as currency pairs, precious metals, certain types of shares.

Typically, depending on the season, you can see this trend: Oil and petroleum products traditionally start to become cheaper after the new year and rise in price with the approach of autumn, that is, it is best to make purchase deals in the second half of the summer, and deal for sale after the new year.

Agricultural products changes in prices for commodities such as wheat, sugar, corn, cotton, cocoa occur according to a rather interesting scheme.

Immediately after harvesting, there may be two scenarios for the development of events, with good yields. There is an increase in the supply of products, which leads to a reduction in price, and vice versa, with low yields, the price jumps upward, as demand exceeds the existing supply.

Then the price stabilizes and reads its slow growth, which continues until the harvesting of the next harvest.

How much can you earn on seasonality?

Usually, the amount of earnings is several percents per month, that is, for three months you are unlikely to earn more than 10-15%, but for large capitals. This is also a good salary. Moreover, the risk of reverse movement is usually minimal. For example, why would the wheat become cheaper for the new year, if the demand for it is stable, and until the next harvest for another six months.

But despite all this it is necessary to be prepared and to unexpected turns of events, not an unambiguous situation is observed at the moment with oil. In fact, there is a manual regulation of prices in the oil market, which breaks the observed trend for years.

 

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