The
Summer Bank Holiday takes place today in the UK . London based institutional traders will not
be at their desks so trading could be thin.
The market turmoil that started with
a melt-down of Chinese equities, and which was exacerbated by thin summer
trading conditions, caused a lot of problems for traders in equities, indexes,
commodities and currencies over the past week and a half.
The Euro-dollar, in particular, had a
wild ride, peaking from a low in the middle of the previous week of close to
1.10 to a spike high on Monday of last week at 1.17. That is a very significant
range in so short a time. Then, for the rest of last week, it fought its way,
but with many a retrace, back to the 200 period Exponential Moving Average
(EMA) on the four-hour chart (see above). This is seen by many traders as an
equilibrium level (This fact is of limited value to a trader, as the pair can
be ‘out of equilibrium’ for extended periods).
Eurozone
inflation is out today
Today, Monday, could see more of the
same, as the Eurostat flash Consumer Price Index figures for the Eurozone are
due for release at 10:00 London
time. The flash outcome, which attempts to anticipate the actual inflation rate
which will be released towards the middle of the month, is of high importance
because of the previous success on the part of the statisticians in making it a
relatively accurate estimate of the real thing. Inflation figures are, of
course, of abiding importance in the considerations of the ECB (and of central
banks everywhere).
As
noted at the top, the UK
has a bank holiday today. Institutional traders in London will not be at their desks, and the
North American markets will not yet have opened when this report is released. Trading
could, as a result, be thin and choppy, especially if the numbers give any
cause for surprise.
A
wild ride in the markets – OmiCronFX Mandelbrot algo system proves its worth
We were particularly pleased with the
behaviour of the OmiCronFX algorithmic trading system during the recent market
turmoil. It did very well what is a most important part of its job, of
protecting equity during such periods.
And the Mandelbrot system as a whole
is an iterative methodology. It relies on real-time trading experience in order
to fine-tune its operation. Its strategy has been formulated using historical
data but for getting down to the fine detail of trading, nothing beats
real-time, tick-by-tick operation of an algorithmic routine (a tick represents
a change in the exchange rate of a currency pair. In busy times, hundreds of
ticks can come through to the trading platform every second).
And so the market gyrations last week
provided another benefit. Under real-time trading conditions we were able to
use Mandelbrot to refine its parameters in a manner that would not otherwise
have been possible. Taken in conjunction with proof of its risk-management and
capital retention capabilities, this was indeed a win-win situation for us.
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