First, this is only a tool (at this point.) What is new?
So the idea is a spinoff of the Sentinel Index on Kevin E's "NFP System - Backtest Included" thread.
I liked the concept but hated the way it created its ranking based on pips instead of percentages.
Below, you can see that 4 pairs can be created with each major. So, for simplicity, we can look at USD's pairs as:
USDJPY
GBPUSD
EURUSD
USDCHF
The idea is to find the percentage gain or lost on EACH PAIR over X time intervals.... X could be a month, a week, or whatever you want to work with.
You add together the percentage gains/losses for each of the 4 pairs, giving the currency's strength (in the example, USD)
Suppose USDJPY is down 3% over the last month (in favor of the Yen.) So for the USD computation, one of the inputs to the calculation would be -0.03.... while the Yen would have +0.03 as one of it's inputs.
When you finish all calculations, you will have a collective percentage gain/loss for each of the 5 currencies. The one with the highest value will have made the biggest gains relative to all others over the past month (week, whatever.) Likewise, the lowest number shows the currency that has lost the most ground.
Taking this a step further, you can take the highest gainer versus the biggest loser, and "guess" (speculate, whatever) that the following month will continue its trend.
So the idea is a spinoff of the Sentinel Index on Kevin E's "NFP System - Backtest Included" thread.
I liked the concept but hated the way it created its ranking based on pips instead of percentages.
Below, you can see that 4 pairs can be created with each major. So, for simplicity, we can look at USD's pairs as:
USDJPY
GBPUSD
EURUSD
USDCHF
The idea is to find the percentage gain or lost on EACH PAIR over X time intervals.... X could be a month, a week, or whatever you want to work with.
You add together the percentage gains/losses for each of the 4 pairs, giving the currency's strength (in the example, USD)
Suppose USDJPY is down 3% over the last month (in favor of the Yen.) So for the USD computation, one of the inputs to the calculation would be -0.03.... while the Yen would have +0.03 as one of it's inputs.
When you finish all calculations, you will have a collective percentage gain/loss for each of the 5 currencies. The one with the highest value will have made the biggest gains relative to all others over the past month (week, whatever.) Likewise, the lowest number shows the currency that has lost the most ground.
Taking this a step further, you can take the highest gainer versus the biggest loser, and "guess" (speculate, whatever) that the following month will continue its trend.
Attached Image