Standard Deviation - An Essential Tool For Forex Trading Success

A

ASusilovic

5 min Chart (1st, 2nd,3rd standard deviation):

eurusd5min.png


1h Chart (1st, 2nd,3rd standard deviation):

eurusd1h.png


4h Chart (1st, 2nd,3rd standard deviation):

eurusd4h.png


As you can see/observe EUR/USD is "usually" floating within the upper and lower 3rd standard deviation. On longer time frames, too. Based on this observation, it´s actually very easy to define a simple trading strategy.

Add the CFTC commitment of traders reports and voila!

Happy New Year!

:)
 
You do know that is the whole premise of standard deviations right? To encapsulate the price data. I think the tool is rather useless.
 
AS, the trading is tight because it's the quiet period between NY close and Aussie/Japan's open. Any movement is going to trade outside.
 
Risk is defined in many ways, e.g., variance, 95th percentile, 4th moment etc, and each definition would have a different strategy.

The one you single out is second moment risk. What you are suggesting is not wrong, just not complete.


Quote from ASusilovic:

5 min Chart (1st, 2nd,3rd standard deviation):

eurusd5min.png


1h Chart (1st, 2nd,3rd standard deviation):

eurusd1h.png


4h Chart (1st, 2nd,3rd standard deviation):

eurusd4h.png


As you can see/observe EUR/USD is "usually" floating within the upper and lower 3rd standard deviation. On longer time frames, too. Based on this observation, it´s actually very easy to define a simple trading strategy.

Add the CFTC commitment of traders reports and voila!

Happy New Year!

:)
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