The emissions market is a young market, and is expected to develop greatly in the years to come. There are uncertainties what fundamental factors are the most important when it comes to price formation. Technical trading strategies may be one of the most cost efficient ways to start trading this market. There is no need for any fundamental data as the prices themselves will determine which action to take in the market.

In this young market the price history is short. For this reason, strategies that trade short-term price movements are the best suited. TradingAdvisor’s most robust strategy for the energy markets, the Breakout Strategy, is put to test in the Emissions market. This strategy has a relatively high winner percentage and takes advantage of the short-term price swings.

Also a short-term trend strategy is used. The trend strategy takes position in the direction of the short-term trend and gives trading signals based on the market direction. A relatively tight exit is used, but as long as the market direction is clear, the position will be held until the trend gives signs of a turn. The correlation between the Breakout and the Trend strategy is historically low.