A Forex View From Afar

A Trader's Look At A Trader's Life

Forex Analysis

Price Distribution For The Euro

Written by A Forex View From Afar on Wednesday, December 31, 2008

According to the data compiled from 2006 to the present day, the euro follows a relatively normal distribution. This means, an investor can determine, to some extent, how much the price will move over the following period, in order to gauge risk and determine the possible duration of a trade.

The attached charts show the probability that the close of the next 15 min, 4 hour or daily candle will be bigger than one half of a standard deviation. For example, there is a 70% chance, or one standard deviation that the euro will move ±10 pips over the next 15 min candle.

Knowing this, a trader or a system developer can very easily calculate the exposure to the market, or estimate how long an open order will last. If someone has a 70 pip stop loss, based on the 4 hour chart there is 5% chance, or even smaller, that the market will hit the Stop Loss within the current candle. This is useful when trying to avoid a release, or avoiding a specific time (U.S. open for example)

Euro Price Distribution Forex

Related Posts by Categories

  1. 0 comments: Responses to “ Price Distribution For The Euro ”

TheLFB Team & The View From Afar Blog

© 2008 A Forex View From a far Trading Blog

Trade Desk View

Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

Want to subscribe?

Subscribe in a reader.