Registered: Dec 2003
Posts: 17

pardon me,
im a newbie in this forum.
does anyone notice a much smaller volatility in forex' intraday behavior ?
when i place a 300 or 500 bar average true range on 15minute charts of eurusd, gbpusd, usdchf, usdjpy, they are declining a lot since november 2006.
what may cause this ?
is it a more stable global economy ?
more liquidity in the spot market ?
less liquidity ?
please advice.
thank you.

Registered: Nov 2006
Posts: 277

It's natural. Volatility goes up and down in cycles. Since November, you're right, it has come down some, especially in certain pairs. But it will rise again as we move to new congestion levels as economies and interest rates change...

Registered: Dec 2003
Posts: 17

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Quote from TrueStory:

It's natural. Volatility goes up and down in cycles. Since November, you're right, it has come down some, especially in certain pairs. But it will rise again as we move to new congestion levels as economies and interest rates change...

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TrueStory, thank you for your relieving answer.
I run a volatility-dependent system, and I have less-frequent trades these days. I start to worry about the market, will it move more in the future, more volatility like the past time..
I'm not quite understand the correlation between market's liquidity and volatility. There must be some correlation, but is it negatively or positively correlated ?
Thank you..

Registered: Nov 2006
Posts: 277

I believe the relationship between liquidity and volatility is too dependent on other factors to be easily defined. It also depends on whether you're looking at short-term or longer-term volatility.

Registered: Dec 2003
Posts: 17

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Quote from TrueStory:

I believe the relationship between liquidity and volatility is too dependent on other factors to be easily defined. It also depends on whether you're looking at short-term or longer-term volatility.

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Ive been exploiting short term volatility for mechanical system design, but has never been learning what fundamental factors do determine volatility.
Could anyone please point me where to look at this, any books or other resources ? Thank you so much.

Registered: Jan 2003
Posts: 12848

yeah...it's like this...what picture am I being presented? right?

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Quote from TrueStory:

I believe the relationship between liquidity and volatility is too dependent on other factors to be easily defined. It also depends on whether you're looking at short-term or longer-term volatility.

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