Very interesting figures were published today. CLS Bank International, which is the largest clearinghouse of Foreign Exchange transactions in the world, reported a drop of settlement instructions by 2.7% in November. Average daily value of FX transactions was $3.66 trillion per day. While this is a small monthly drop, numbers represent about 12% increase over last year. Data provided by CLS Bank is as close as one can get to reliable information on the subject- total of 6,400 participants are currently using this settlement service. Included in this total are 444 banks, corporates and non-bank financial institutions and a further 5,956 investment funds. Well over half of global volume is handled by CLS.

It has very little practical value for an average retail trader, only represent just how liquid currencies are. However, these kind of numbers are twisted and misused by unscrupulous promoters of questionable services and sellers of useless programs, or “robot”. I have seen statements like “$ 3 Trillion dollars are made in Forex every day- are you ready to claim your share?” among others. Absolute nonsense. Volume numbers have little effect  on how much money is made, and lost, by an individual. But I guess large figures can impress people and sway them to buy newest and “hottest” product. Incidentally, most of them are so “hot” that should be treated like a hot potato….

December trading  post from yesterday, mentioned couple of things to look for after markets opened. Start of the trading week was rather flat, and not much interesting happened. No gaps that would spark mine, or anybodys interest, no follow up of Friday moves. At least not in the manner that I look for. So, I took number of little different trades.

Once the Yen pairs failed to move up after the open, they started to consolidate with a downward bias. Small move down became a real possibility, so couple of sell orders were placed, like this one in NZD-JPY. Hourly chart was used, with minor low as an entry point, at 94.30. Move was fast, not big, but in line with expectations. Target was selected using FIB projections, and it worked just fine.

The 1.62 projection worked fine, but so would the 2.00 one. That would coincide with additional support at 100 SMA. However, i settled for the smaller target, or 35 pips. Nothing grand, but in line with the opportunity market presented, and time expectation. I see it as a good trade, even if full potential was not utilize. NZD-JPY is discussed, because that’s the pair I used last as an example for general Japanese Yen direction.  At that time, I was looking for another move down in JPY pairs, if certain situation took place. That didn’t happen, Yen just kept getting weaker.

This chart is similar to the one from previous post, only possible sell area was moved up, tracking price movement. Not sure what is next for Yen pairs, but I wouldn’t place any larger size sell trades unless the above condition is met. Or something very similar. Lower magnitude time frames, like hourly or 15M, are playable on both sides but  with small objectives. And they should be completed rather quickly, to not risk sudden trend change. So, I’m waiting for markets to keep moving, and I’ll be adjusting my views, until such time when they both line up.

Mike K.