Forecasting Trading-Time based Profit-Making Strategies in Forex Industry: Using Australian Forex Data

Due to the constant fluctuation on global currency rates, it is challenging to make predictions on trading in foreign exchange (Forex) currency market without an intensive analysis; hence, traders struggle to make a profit. This study aims to analyze the relationship between the trade open time and profit in the Forex currency market to help traders to increase the chance of winning trades and make a profit. We developed a technique to observe the most suitable time duration to trade and the profit. This technique assists traders to enhance the chance of winning trades and make a profit by identifying whether it is more likely to make a profit when they keep the trade opened for a longer time or a shorter time. A Forex dataset (N=1,000,000 trades) from a third-party broker database based in Australia has been used. The collected data were filtered according to the popularity of currency pairs. Five currency pairs (as EUR vs USD, GBP vs JPY, USD vs JPY, GBP vs USD and EUR vs JPY) were further analyzed using Support Vector Machine (SVM) with the Radial Basis Function (RBF) kernel and K-Means clustering algorithms. It showed that EUR vs USD and USD vs JPY have sensitive movements of profit with the trading time. The highest profit was observed trading time in between 5 to 15 minutes. Our analysis illustrates that shorter time traders are making more profits than the longer time traders. Hence, this study demonstrates that Forex traders make a profit when the market has a unique volatile situation. This study should be useful as a reference for researches in Forex market analyses and Forex Industry to utilize profitmaking strategies.