Forums General Discussions Currency Strength

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  • #4984
    Saver0
    Moderator

      This thread will be dedicated to discussing currency strength and ways of determining currency strength (CS). Specifically, the following questions comes to mind when speaking of currency strength in Forex.

      1. Why currency strength?
      2. What is currency strength?
      3. What are ways in which we can determine currency strength?
      4. How can we use currency strength in trading?
      5. Is there an edge?

      During the past few years of my Forex journey, I have come across a few popular currency strength indicators. To my knowledge there is pretty much just 1 primary way in which they all function and that is based on moving averages to create an index price for each currency.  I always found this a bit misleading because its not really showing the true strength but price of each individual currency.

      First of all, let’s see if we can answer these questions.

      1) Why currency strength?
      I think currency strength is one of the most important aspects of trading Forex. If we can accurately know which currency is overall stronger vs another, then that would mean we should be very easily apply that to make a profitable trade. I think most would agree that currency strength can be very important.

      2) What is currency strength?
      I think this is where many of us might have differences in opinion so I will express my opinion.
      I believe that it should be a measure of strength of one currency over another. It’s a measure of force or the impact.

      3) What are ways in which we can determine currency strength?
      I think the best way to measure the strength of one currency over another is when force is applied. Force is applied during news events by both the bulls and the bears. Imagine the scenario where there is high impact good news for the USD. Across the board we should see all the pairs with USD react in a similar way. BUT, the way to measure it would be to compare the difference in movement or force. This would tell us something about the opposite force applied by the other pair that is tied to USD. This opposite force I believe is the true strength of the currency. This can also be measured per candle as well and not just per news events.

      4) How can we use currency strength in trading?
      I think the application would be pretty simple. Once we determine the strength then it would be a matter of trading the stronger currency vs the weaker.

      5) Is there an edge?
      I certainly would think so but this needs statistical backing.

      I will leave you with a screenshot of the indicator that I made to test this out. I would love to hear your opinion and your experience with currency strength. Also feel free to attach or link to other great currency strength indicators that you found useful.

      In Yellow is the AUD

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      Focus, Patience, Determination & Order in chaos

      #4988
      smallcat
      Participant

        Thanks for opening discussion on this topic brother :good:   , subscribe .

        About similar indicator:

        I just know  the one created by Hannover at FF . It compares 8 major currencies moving price in that day. Some times i think it changes too fast, but may be i do not know the right setting :-(

         

         

        #4991
        scissors
        Participant

          Thanks for the new thread, I subscribed :good: sorry I am still a novice and I am learning everyday in the forex trading. I do notice relationship when I trade eurusd, gbpusd, audusd and usdjpy. Either eurusd or usdjpy seems to determine the turning point of the day during my side at 2pm (gmt +8). I still monitoring. I believe timing is a part of the play for currency power. 2pips worth of thinking

          • This reply was modified 9 years, 4 months ago by scissors.
          #4996
          LearnAlways
          Participant

            Hi Saver0,

            I just started using Currency Strength Indicator after guys on this forum kept on saying about its usefulness. I can see it have great potential and theoretically sound. I am using CSS from SHF. Sorry to attach the file here, I can’t login SHF and I don’t know why. So I can’t send the link. Even with re-sent password also cannot log in. Maybe my account have been hacked. I changed password once over there when I received weekly mail updates from SHF. Going to try again maybe later.

            Anyway this indicator have the option to display all 24 currency pairs or only the one on chart, plus I like the background color (long or short) as it can be quite confusing when the lines criss cross & the base currency is different.

            If anyone claims to be me asking for $ please ignore me and inform Saver0, I might not be rich yet(still trying to be profitable) but I ain’t selling anything. And pls don’t send $ to anyone claiming to be me haha. :yes:

            Best Regards,

            LearnAlways

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            I only know I know nothing
            Skype: learnalways@outlook.com

            #4999
            LearnAlways
            Participant

              Hi Saver0, I just started using Currency Strength Indicator after guys on this forum kept on saying about its usefulness. I can see it have great potential and theoretically sound. I am using CSS from SHF. Sorry to attach the file here, I can’t login SHF and I don’t know why. So I can’t send the link. Even with re-sent password also cannot log in. Maybe my account have been hacked. I changed password once over there when I received weekly mail updates from SHF. Going to try again maybe later. Anyway this indicator have the option to display all 24 currency pairs or only the one on chart, plus I like the background color (long or short) as it can be quite confusing when the lines criss cross & the base currency is different. If anyone claims to be me asking for $ please ignore me and inform Saver0, I might not be rich yet(still trying to be profitable) but I ain’t selling anything. And pls don’t send $ to anyone claiming to be me haha. :yes: Best Regards, LearnAlways

              Looks like someone trying to crack user account over at SHF. Just read the weekly roundup msg by SteveHopwood. Anyway able to login and reset password.

              I only know I know nothing
              Skype: learnalways@outlook.com

              #5002
              simplex
              Moderator

                Sorry to attach the file here, I can’t login SHF and I don’t know why. So I can’t send the link.

                Hi LA,

                Yes – Steve told us that somebody might try to crack SHF accounts. All well again?

                To add some info to the indicator you posted, here’s some of the most important threads and posts at SHF related to CSS:

                Nanningbob’s CSS related thread: http://www.stevehopwoodforex.com/phpBB3/viewtopic.php?f=88&t=3556
                Paul’s LibCSS thread: http://www.stevehopwoodforex.com/phpBB3/viewtopic.php?f=45&t=2905
                NeoTrader’s CSS (.ex4 only): http://www.stevehopwoodforex.com/phpBB3/viewtopic.php?f=45&t=639

                Cheers, simplex

                A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                #5004
                simplex
                Moderator

                  Hi Saver,

                  Great idea to start a thread on this!

                  I think the best way to measure the strength of one currency over another is when force is applied.

                  Does that mean that your indicator Impact Strength will only measure certain movements (or whatever) in the moment of a news release related to the pair in question?

                  Across the board we should see all the pairs with USD react in a similar way. BUT, the way to measure it would be to compare the difference in movement or force. This would tell us something about the opposite force applied by the other pair that is tied to USD.

                  If your indicator calculates the currencies’ strength the way I’m used to, then any positive value related to the base currency will be counted as a negative one for the quote currency. When USD shows a strong reaction after some news this does not necessarily show that AUD is specifically weak if it’s under pressure for some time during a USD upswing.

                  I really do believe that we can’t discuss concepts like currency strength seriously without diving deeper into algorithmic detail. Your initial post just doesn’t provide sufficient detail to start a fruitful discussion. I’m working on CSS myself for over a year now, and started to code my first EA in that basis (see screenshot).

                  It’s not necessary to post the source code if you like to keep it disclosed, but algorithmic detail is essential. Otherwise any discussion on this topic won’t do more than scratch a solid surface with its fingernails.

                  CSS  is an important concept, and this thread can become really relevant. But first of all: thank’s for starting it!

                  Cheers, simplex

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                  A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                  #5010
                  simplex
                  Moderator

                    A ‘Harmonic’ Approach To Currency Strength

                    Before I start: this is experimental – no actual trading setup!

                    About a week ago I came across John Ehlers’ latest book Cycle Analytics For Traders. Highly recommended for anybody who isn’t scared of some math on a higher level. I just couldn’t resist to read it and code some tiny bits instead of being wise and work on my EA :whistle: .

                    Today I finished to wrap his Roofing Indicator in a function, so now I can integrate it as a one-liner into other projects. This lead to the Currency Strength indicator shown in the screenshot, which is based on a normalized Ehlers’ roofing algorithm.

                    I exchanged Ehlers’ original normalization algorithm (‘Automatic Gain Control’ AGC) for a simple division by price, because I found that the AGC added too much distortion to the original roofing signal, which is counterproductive after reducing spectral dilation effects by the roofing algo before.

                    Basically a roofing filter is a band-pass filter with a wide bandwidth. Default cutoff periods (Ehlers’ suggestions) are tuned to 10 bars low-pass and 48 bars high-pass, which means that faster as well as slower swings will be more or less suppressed.

                    The pic shows a display of 4 roofing filter based currency strength indicators tuned harmonically, so every indicator instance will display signals of one octave only. From top to bottom, the roofing filters bands are 4 – 8 bars, 8 – 16, 16 – 32, and 32 – 64.

                    Ehlers states that everything below 10 bars can’t be analyzed properly because of noise, but packaged in a cluster indicator it seems to work pretty well as an early warning for potential swing reversals. Has to be tested thouroughly! Maybe noise effects tend to annihilate each other statistically when summed up over several pairs per currency.

                    The 32 – 64 bars octave seems to be too slow to provide suitable signals, so maybe a combination of the upper three bands might be interesting to explore further.

                    All clusters are showing values for EUR, GBP, USD, CAD, JPY, AUD, NZD. At the moment, I’m skipping CHF by default in higher timeframes.

                    Maybe this one will serve as the default cluster indicator for the multipair EA I’m currently working on. Looks pretty promising, yet has to be tested.

                    Info about Ehlers’ book can be found here: http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118728513.html  Regarding the roofing algorithm, there are several white papers and presentations freely available (I don’t have the links at the moment – sorry!)

                    Direct link to a free chapter provided by the publisher: http://media.wiley.com/product_data/excerpt/13/11187285/1118728513-10.pdf

                    Cheers, simplex

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                    A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                    #5012
                    Rahat Lukum
                    Participant

                       Highly recommended for anybody who isn’t scared of some math on a higher level.  

                      I can only be scared of things I know  ;-)  I was intrigued by the title, so I hunted it down, received the book today. Thanks for the tip!

                      #5014
                      smallcat
                      Participant

                        Hi Saver, Great idea to start a thread on this!

                        I think the best way to measure the strength of one currency over another is when force is applied.

                        Does that mean that your indicator Impact Strength will only measure certain movements (or whatever) in the moment of a news release related to the pair in question?

                        Across the board we should see all the pairs with USD react in a similar way. BUT, the way to measure it would be to compare the difference in movement or force. This would tell us something about the opposite force applied by the other pair that is tied to USD.

                        If your indicator calculates the currencies’ strength the way I’m used to, then any positive value related to the base currency will be counted as a negative one for the quote currency. When USD shows a strong reaction after some news this does not necessarily show that AUD is specifically weak if it’s under pressure for some time during a USD upswing. I really do believe that we can’t discuss concepts like currency strength seriously without diving deeper into algorithmic detail. Your initial post just doesn’t provide sufficient detail to start a fruitful discussion. I’m working on CSS myself for over a year now, and started to code my first EA in that basis (see screenshot). It’s not necessary to post the source code if you like to keep it disclosed, but algorithmic detail is essential. Otherwise any discussion on this topic won’t do more than scratch a solid surface with its fingernails. CSS is an important concept, and this thread can become really relevant. But first of all: thank’s for starting it! Cheers, simplex

                        Great Simplex. And thanks for the links …..

                         

                        #5019
                        LearnAlways
                        Participant

                          Hi Simplex,

                          Thanks for the concern, all is well. I’ll be following this Currency Strength Thread with great interest.
                          Pls see attached pic, if CSS with dots plotted on the line as option and we can visually see the force momentum of which dotted point can we measure the force of impact better as compared to just a line? Just a simple idea, maybe can be used as an option to display dots.

                          Best Regards,
                          LearnAlways

                          Sorry I don’t know why cant attach pic but the idea is there. ok now

                          • This reply was modified 9 years, 4 months ago by LearnAlways.
                          • This reply was modified 9 years, 4 months ago by LearnAlways.
                          • This reply was modified 9 years, 4 months ago by LearnAlways.
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                          I only know I know nothing
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                          #5021
                          Saver0
                          Moderator

                            Thanks a lot for the links everybody! And a special thanks to Simplex for starting a detailed discussion.

                            First, let me answer your question.

                            Does that mean that your indicator Impact Strength will only measure certain movements (or whatever) in the moment of a news release related to the pair in question?

                            If your indicator calculates the currencies’ strength the way I’m used to, then any positive value related to the base currency will be counted as a negative one for the quote currency. When USD shows a strong reaction after some news this does not necessarily show that AUD is specifically weak if it’s under pressure for some time during a USD upswing.

                            I was using news release as an example of what I’m thinking about. To make it simple, let’s imagine we only have 4 major currencies, EUR, USD, GBP, JPY. So the pairs are: EURUSD, EURGBP, EURJPY, GBPUSD, USDJPY, GBPJPY.

                            Now lets say that the EUR had a major news announcement that was positive. Then we would see EURUSD and EURGBP and EURJPY go up. But the number of pips that they move will be different. We know from experience that typically EURGBP moves the least, EURJPY moves the most and EURUSD would be somewhere a bit lower than EURJPY. We can mathematically normalize to remove the typical volatility with something like an ATR. Once normalized in this way, I would expect and think that the impact of this news event should be the same across all 3 pairs in a perfectly balanced news only driven environment. But we know that this is not the case because traders, especially the big players who actually participated in this huge news spike, they trade because they think/know that one currency is stronger/weaker than another. From the EUR news, I think its only possible to measure the strength of the JPY, USD and GBP because EUR event we treat as the neutral. The differences in the normalized news impact I think would tell us something about the strength/weakness of JPY, USD and GBP.
                            Edit: To normalize to remove the typical volatility I think we need to normalize using a time based ATR because during different market hours, currency movement differs.

                            I hope what I’m trying to say is move clear with the above example. Let me know if anybody needs any further explanation. I’m still playing with this idea and the indicator. If/when I have something worthwhile, I will certainly be sharing it here.

                            About a week ago I came across John Ehlers’ latest book Cycle Analytics For Traders. Highly recommended for anybody who isn’t scared of some math on a higher level. I just couldn’t resist to read it and code some tiny bits instead of being wise and work on my EA .

                            Simplex, this work looks extremely interesting. I just wish I had the time to read through the book and apply some of its principles. I have played around with cycles as well but I concluded it as not having any predictive properties for short term day trading. The way I see it, there are only major cycles and the short term cycles might not be predictable or contain maybe only a tiny edge. I can’t judge Joh Ehlers’ work since I haven’t read any of it. And as for the major cycles, no prediction is required and only really need to pay attention to major news events because its the central banks of the world that’s pretty much setting markets in motion in one direction or another. The difficult part is figuring out the proper oversold/overbought conditions to make that short term gain with a low risk and a high reward. That’s why I’m thinking that perhaps by having a short term strength indicator, we might be able to capitalize on trades that are towards the major trend at the proper times.

                            By the way, looks like markets are coming back into a ranging/consolidation area perhaps before continuing on the previous trend. It should continue the previous trend unless some major news tells it otherwise in my opinion.. So that means USD to get stronger and others to get weaker relatively.

                             

                            Focus, Patience, Determination & Order in chaos

                            #5028
                            MTH2014
                            Participant

                              Great Discussion,  Subscribed. :good:

                              My Kindergarten calculation that maybe totally wrong.

                              If we add  USDJPY/100  with  USDEUR (MathPow(EURUSD,-1))  don’t we get = 2 USD, 1 JPY and 1 EUR ..lol.. ???

                              and if we subtract the 2USD 1 JPY and 1 EUR with  JPYEUR (MathPow(EURJPY,-1)/100) don’t we get = 2 USD .. ?

                              mmm.. then we divided by 2 to get only 1 USD value .. lol…  ah maybe my brain already little bit damage… to think like that.. hahaha.. :wacko:

                              so we don’t need the whole USD pairs to know the USD strength or  the whole EUR pairs to know EUR strength too…

                              Wish You All The Best

                              MTH

                              PS.  this is that kindergarten math calculation ‘work’.. look like lol

                               

                               

                               

                              • This reply was modified 9 years, 4 months ago by MTH2014.

                              Intuition, Experiences and Common sense..
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                              #5030
                              simplex
                              Moderator

                                Now lets say that the EUR had a major news announcement that was positive. Then we would see EURUSD and EURGBP and EURJPY go up. But the number of pips that they move will be different. We know from experience that typically EURGBP moves the least, EURJPY moves the most and EURUSD would be somewhere a bit lower than EURJPY. We can mathematically normalize to remove the typical volatility with something like an ATR. Once normalized in this way, I would expect and think that the impact of this news event should be the same across all 3 pairs in a perfectly balanced news only driven environment. But we know that this is not the case because traders, especially the big players who actually participated in this huge news spike, they trade because they think/know that one currency is stronger/weaker than another. From the EUR news, I think its only possible to measure the strength of the JPY, USD and GBP because EUR event we treat as the neutral. The differences in the normalized news impact I think would tell us something about the strength/weakness of JPY, USD and GBP.

                                Now this is providing an interesting and new viewpoint for me. Thanks for clarifying!

                                When analyzing the strength of the moves after a news event I would firstly have a look at current exchange rates: EURGPB 0.73, EURJPY 1.35, EURUSD 1.13. I skipped the factor 100 for the JPY pair here, which is being compensated when calculating pips. Those rates will show why ‘EURGBP moves the least, EURJPY moves the most and EURUSD would be somewhere a bit lower than EURJPY‘, as you said. That’s why I just don’t use calculations based on classic pips for analytics: one pip has different value for any of those symbols. In good money management functions this imbalance has to be compensated. So when estimating the strength of a move, I would suggest to normalize the original pips value dividing by price:

                                pips_normalized = pips_original / current_price

                                We can mathematically normalize to remove the typical volatility with something like an ATR.

                                Yes, we can! :yes:   But shoud we really do that? :unsure:   I don’t think so. From the nature of its calculation, ATR will roughly measure the absolute level of noise that is superimposed per bar over the ‘pure’ swing move.

                                Is it wise to normalize on noise? Depends on what you’re planning to do. When you’re planning to set a protective stop wide enough to prevent your trade from being stopped out by noise then ATR (absolute noise level!) is a classic tool to estimate a value that statistically makes sense. Same can be true for defining entry / exit levels for scalping a narrow ranging channel.

                                When estimating the strength of a currency, I would not like to have my results distorted by the level of noise that was evident during the last 14 or 20 bars. Currency strength should provide the ‘big picture’, kind of a helicopter view. And from a helicopter view, price levels are very stable – at least at times when the Swiss National Bank stays quiet. That stability is why we use those high leverage ratios for practical trading. So I would take the most stable value at hand to normalize those pip moves: price itself (see formula above).

                                Communicating in amounts of pips is easy and convenient: ‘Ha – I made 378 pips in a single trade yesterday!’ –  ‘Wow – congratulations, brother!’ – ‘And I dumped 302 of them in several whipsaws!’

                                This whole normalization discussion could be skipped if we would leave those pip values on that level of communication, and use something more reliable for any analytical purpose. What is it that makes (or dumps) money in the FX market? It’s the relative move of an exchange rate over a certain time as related to its initial rate at the beginning of the move. So why not use this measure directly?

                                move_per_mille = 1000 * (price_end – price_start) / price_start
                                move_per_million = 1000000 * (price_end – price_start) / price_start

                                No more normalization necessary! The magnitude of a relative move is what matters analytically. Just my opinion – what’s yours?

                                Cheers, simplex

                                A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                                #5032
                                simplex
                                Moderator

                                  I have played around with cycles as well but I concluded it as not having any predictive properties for short term day trading.

                                  Yes, this is also my opinion, more or less. Ehlers suggests a new way to calculate the dominant cycle length by a method he calls Autocorrelation Periodogram. I coded it, debugged it, and it showed absolutely no reliable output on any FX instrument. Coding adaptive filters based on this lead me nowhere.

                                  I’ll skip that now. Period. Beat me if slide back to that! :negative:

                                  Anybody can observe short term dominant cycles in FX charts, visually. They do exist, but they just don’t persist long enough to be calculated in real time and get some edge out of it. I’ll leave that. Promise!

                                  What I found to be very interesting is Ehlers’ approach of being aware of the fact that those short term cycles to exist and filter those out that could potentially disturb our analysis before going further. He did that in his roofing indicator. Leaving aside his book, he also presented the concept in this white paper on one of his websites: http://www.stockspotter.com/files/PredictiveIndicators.pdf

                                  But don’t take the title line too seriously: this indicator isn’t ‘predictive’ in any reliable manner. Instead appears to be a valuable tool to clean chart data for swing analysis.

                                  There are swings. Swings do have a length. I’d like to exploit them, if possible. There is noise. Noise has a certain strenght, that can change very quickly. I want to avoid being stopped out by noise, and maybe exploit it for low risk entries. What I won’t do is trying to estimate swing length in real time. In today’s FX market, this doesn’t work.

                                  Ehlers’ Roofing Filter seems to be an appropriate tool for that.

                                  A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                                  #5126
                                  gg53
                                  Participant

                                    Currency Strength is one of the most important indicators in trading.

                                    It has a “predictive” nature if combined with momentum and volume.

                                    A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result.

                                    Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself)  of that pair will add “noise” to the end result.

                                    Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size.

                                    G.

                                     

                                    #5127
                                    smallcat
                                    Participant

                                      Currency Strength is one of the most important indicators in trading. It has a “predictive” nature if combined with momentum and volume. A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result. Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself) of that pair will add “noise” to the end result. Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size. G.

                                      Hm, this is very interesting G. So, we just need calculate 7 major pairs (8 currency) ?
                                      Any clue on:  Momentum, Volume ? Is it using the standard MT4 indicators of : Momentum & Volume indicator ?
                                      How about: market share ?

                                      Thanks

                                      #5128
                                      gg53
                                      Participant

                                        Currency Strength is one of the most important indicators in trading. It has a “predictive” nature if combined with momentum and volume. A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result. Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself) of that pair will add “noise” to the end result. Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size. G.

                                        Hm, this is very interesting G. So, we just need calculate 7 major pairs (8 currency) ? Any clue on: Momentum, Volume ? Is it using the standard MT4 indicators of : Momentum & Volume indicator ? How about: market share ? Thanks

                                        1. Market Share: You can find “market share” here (look for table titled “Most traded currencies by value”): http://en.wikipedia.org/wiki/Foreign_exchange_market

                                        Note that you have to divide the number by 2, since it totals 200%.

                                        2. Momentum: I keep track with my “standard” Currencies indie AND “momentum” calculated one. The first is a simple T-T1 and the second is the diff in momentum. Momentum diff is calculated by Momentum(13) MA(3).

                                        3. Volume: using my own TickVolume indie.

                                         

                                        G.

                                         

                                        #5130
                                        smallcat
                                        Participant

                                          Currency Strength is one of the most important indicators in trading. It has a “predictive” nature if combined with momentum and volume. A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result. Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself) of that pair will add “noise” to the end result. Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size. G.

                                          Hm, this is very interesting G. So, we just need calculate 7 major pairs (8 currency) ? Any clue on: Momentum, Volume ? Is it using the standard MT4 indicators of : Momentum & Volume indicator ? How about: market share ? Thanks

                                          1. Market Share: You can find “market share” here (look for table titled “Most traded currencies by value”): http://en.wikipedia.org/wiki/Foreign_exchange_market Note that you have to divide the number by 2, since it totals 200%. 2. Momentum: I keep track with my “standard” Currencies indie AND “momentum” calculated one. The first is a simple T-T1 and the second is the diff in momentum. Momentum diff is calculated by Momentum(13) MA(3). 3. Volume: using my own TickVolume indie. G.

                                          Thanks G.  For market share, we must take the value proportionally , by comparing each currency with the Sum of that 8 currencies ?  Or, how to apply it ?

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                                          #5132
                                          gg53
                                          Participant

                                            Currency Strength is one of the most important indicators in trading. It has a “predictive” nature if combined with momentum and volume. A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result. Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself) of that pair will add “noise” to the end result. Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size. G.

                                            Hm, this is very interesting G. So, we just need calculate 7 major pairs (8 currency) ? Any clue on: Momentum, Volume ? Is it using the standard MT4 indicators of : Momentum & Volume indicator ? How about: market share ? Thanks

                                            1. Market Share: You can find “market share” here (look for table titled “Most traded currencies by value”): http://en.wikipedia.org/wiki/Foreign_exchange_market Note that you have to divide the number by 2, since it totals 200%. 2. Momentum: I keep track with my “standard” Currencies indie AND “momentum” calculated one. The first is a simple T-T1 and the second is the diff in momentum. Momentum diff is calculated by Momentum(13) MA(3). 3. Volume: using my own TickVolume indie. G.

                                            Thanks G. For market share, we must take the value proportionally , by comparing each currency with the Sum of that 8 currencies ? Or, how to apply it ?

                                            Use “Market share” as a factor.

                                            Example (factors from your attached table):

                                            USD = USD*0.435

                                            EUR = EUR*0.165

                                            JPY = JPY*0.115

                                            …..

                                            ….

                                            Yet another “trick of the trade”:

                                            Pay VERY close attention to USD, EUR, JPY when two of them are in one direction and the other in opposite. This is going to be a MAJOR move !!

                                            Why? Because it’s 70% of the whole market volume !!!

                                             

                                            G.

                                             

                                            #5143
                                            smallcat
                                            Participant

                                              Thanks G. For market share, we must take the value proportionally , by comparing each currency with the Sum of that 8 currencies ? Or, how to apply it ?

                                              Use “Market share” as a factor. Example (factors from your attached table): USD = USD*0.435 EUR = EUR*0.165 JPY = JPY*0.115 ….. …. Yet another “trick of the trade”: Pay VERY close attention to USD, EUR, JPY when two of them are in one direction and the other in opposite. This is going to be a MAJOR move !! Why? Because it’s 70% of the whole market volume !!! G.

                                              Thank G, may be you mean ‘three’ of them (instead of : ‘two’ of them) ?

                                              #5144
                                              gg53
                                              Participant

                                                Thanks G. For market share, we must take the value proportionally , by comparing each currency with the Sum of that 8 currencies ? Or, how to apply it ?

                                                Use “Market share” as a factor. Example (factors from your attached table): USD = USD*0.435 EUR = EUR*0.165 JPY = JPY*0.115 ….. …. Yet another “trick of the trade”: Pay VERY close attention to USD, EUR, JPY when two of them are in one direction and the other in opposite. This is going to be a MAJOR move !! Why? Because it’s 70% of the whole market volume !!! G.

                                                Thank G, may be you mean ‘three’ of them (instead of : ‘two’ of them) ?

                                                No, I meant what I wrote….

                                                Two of them in one direction and the third one in opposite direction.

                                                Example:

                                                If USD & JPY going UP and EUR going DOWN – a lot of pips await for you in:

                                                EURUSD – Short

                                                EURJPY – Short

                                                 

                                                G.

                                                • This reply was modified 9 years, 3 months ago by gg53.
                                                #5151
                                                smallcat
                                                Participant

                                                  No, I meant what I wrote…. Two of them in one direction and the third one in opposite direction. Example: If USD & JPY going UP and EUR going DOWN – a lot of pips await for you in: EURUSD – Short EURJPY – Short G.

                                                  Understood, thanks a lot G !!

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                                                  #5156
                                                  vana
                                                  Participant

                                                    Hi Guys…i am sharing one of the best indicators – currency strenght on the world :o).For good running is good to have all of the pairs combination…

                                                    I am attached two my template. The first one i am using for M5 chart. If you wannt to changed a timeframe if market is closed you must change TF and restart MT4…

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                                                    #5161
                                                    gg53
                                                    Participant

                                                      Smallcat,

                                                      Here is my Std. Currency strength (Spaghetti).

                                                      Blue – EUR

                                                      Green = USD

                                                      Yellow = JPY

                                                      vertical lines mark opposite direction of 2 currencies against the third one – denoting massive move.

                                                      In those situations you can short the EUR against any other currency, almost blindly with almost 0 or minimal DD.

                                                       

                                                      G.

                                                       

                                                      • This reply was modified 9 years, 3 months ago by gg53.
                                                      • This reply was modified 9 years, 3 months ago by gg53.
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