A reasonable question would be “why didn’t I take a trade in the British Pound about a week ago?”
The answer has a bit of a lesson: the charts I have for currencies look really odd, as if no one is trading them. Click on this image to see what I’m talking about:
Odd, isn’t it? Sort of like dots or really small bars. Like nobody’s trading it.
I believe the technical term is “not nice legs”.
So, the answer to, “Why didn’t you take that GBP trade” is that I don’t trust the signals from a chart that’s so screwy looking.I don’t want to trade an issue with no volume.And I certainly would have a hard time believing the ATR (Average True Range.What range? They’re dots!)
So what’s the story? is this data just junk? Maybe, maybe not. I scanned the daily volume report from cme, and it may be that volume in the currency pits is practically nil. Notice that the open outcry volume for GBP is ludicrous, like 11 contracts on that report.
Digging around the CME site, I found a chart of the electronically traded GBP:
Turns out my data provider (eSignal / QCharts) puts the electronically traded data in a different symbol (QBP).
Live and learn.
The larger lesson is about common sense: if a chart looks “funny” or somehow wrong, don’t trust it. Or at least, don’t trade against it.
