Why Forex Still Surprises Singapore Traders

The position of retail traders in Singapore is unique in the global currency trading scene. They arrive well-prepared, with spreadsheets packed with economic calendars, a basic knowledge of MAS guidelines, and a month or two of demo trading under their belts. However, the forex market can surprise even the most systematic of traders, and Singapore’s trading community has experienced far too many times that the market has moved in ways that are hard to predict.

A surprising, but instructive, example is not one of the exotic pairs, but the Singapore dollar. The SGD is not freely floating, but is managed within a policy band by the Monetary Authority of Singapore, so the movements in the rate are as much a result of MAS intervention as they are of market forces. Those who come in with the same approach that they used in trading EUR/USD or GBP/JPY are faced with a recalibration. Those who were short on the back of the adjustment in the exchange rate policy setting in MAS for inflation in 2022 suffered losses due to a shift in MAS exchange rate policy, not because their technical analysis was wrong.

Image Source: Pixabay

Whether it’s any particular pair or not, the market can throw a curveball. During Asian session hours, traders may experience tight ranges and minimal volatility, making them feel they have a good idea of when a direction is going to be taken. Then an unexpected remark by a Federal Reserve official during a press conference in Washington turns back the trend on the USD side before the London open and a well-constructed setup is undone. There are traders who are quite familiar with this, and those who trade in Singapore have made it a common occurrence that they have to deal with overnight risk as a separate discipline.

One of the things that keeps the market capable of surprising traders is the correlation that seems to work until it doesn’t. For years, oil prices and the Canadian dollar have moved in tandem, providing a possible easy-to-follow rule for traders. The commodity currencies and risk appetite trends were similar to those observed in various economic cycles. The more these correlations are violated, the more confused the market is likely to become, as the traders had become accustomed to using these as anchors for their trading decisions. Over the last few years, Singapore traders who trade commodity pairs have had to revisit these assumptions more than once.

The introduction of technology has introduced yet another layer of uncertainty. A major part of today’s volume has been taken up by algorithmic trading systems, especially during significant liquidity events. Retail traders are using platforms such as MetaTrader 5 or cTrader and are experiencing price action that doesn’t adhere to the typical chart patterns, in part because institutional algorithms are reacting to signals that manual chart traders are not seeing. It creates a market where experience remains important but where it is continually being updated.

The thing which makes traders stick around even in the face of all of this is the same thing which makes the market challenging. Forex is a place where patience is rewarded and people who are curious are rewarded. Experienced traders in Singapore who have consistently participated in the trading process over the years are rather fond of saying that the market is not so much a puzzle to be solved as a system that continually evolves. What that community demonstrates is that it is not paralysis from self-doubt that sustains a trading career, but the willingness to challenge assumptions when the market presents an unexpected scenario, and that willingness is what sets experienced traders apart.