Title

Impact of Currency Pairs, Time Frames and Technical Indicators On Trading Profit in Forex Spot Market.

Authors

Krishnan, Rajeswari; Menon, S. Sandhya

Abstract

This research paper focuses on studying the impact of Currency Pairs, Time Frames and Technical Indicators on Trading Profit in Foreign Exchange Spot Market. The study also is aimed at exploring the relationship between various related parameters such as Profitability, Maximum Draw Down, Time in Position, Dealt Lots and Charges associated with currency trading. The period of study is from 01.09.2006 to 10.06.2008 and the data collected with a sample size of 1400, pertains to two trade durations viz. i) one year and ii) three months. The study covers four popular Currency Pairs (EUR/USD, GBP/USD, USD/CHF & USD/JPY), six Time Frames (5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours & 1 day) and ten Indicators (5 leading and 5 lagging). The study very clearly shows that Technical Analysis is profitable in currency trading, and this is proved by the fact that all the Currency Pairs, Time Frames and Indicators have yielded trading profits in Forex Spot Market. Among the four currency pairs, EUR/USD proves to be more profitable, strong and less risky. Though there is no notable difference in trading profit, while using different Time Frames, it is observed that trading with shorter time frames are more risky and provide low liquidity to the traders, as compared to longer Time Frames. Regarding use of Indicators, if used scientifically with combinations of proper strategies, they produce significant profits.

Subjects

FOREIGN exchange market; PROFITABILITY; LIQUIDITY (Economics); STOCK exchanges; PROFIT

Publication

International Journal of Business Insights & Transformation, 2009, Vol 2, Issue 2, p34

ISSN

0974-5874

Publication type

Academic Journal