MADdash (Moving Average Distance)
Latest Version: 1.38
Frequently Asked Questions click here
What is MADdash? A multi timeframe dashboard looking at price's distance from a moving average.
Where do I put the file?
Latest version is an INDICATOR
What is the background to MADdash? Back in April I started the project with 919gilead. This was the parent project to csDash but because MADdash has been stable under testing it has not required many modifications. Consequently, its development is now behind csDash which has benefited from unexpected levels of interest.
Who has tested MADdash? So far, only 919gilead. Hopefully he will chime in with some discussion and comments about its trading application. I haven't traded it personally.
What is likely to happen next? In the short term, bug fixes only; I'm rather swamped with other projects!
Ultimately, I'd like to implement some of the improvements I made in the development of csDash. I'd also like to substitute the CSM logic in place of the MA distance logic (thus giving a MTF CSM).
How does it work?
On the left hand side you have the same 8 currency groups that csDash uses.
Please bear in mind that MADdash is still locating "strong" and "weak" pairs just like csDash, but by using a different technique.
For each timeframe, the MA distances are averaged to give a derived MA distance for each currency (the bottom line of each of the 8 boxes)
Green means that price is above the MA, red means that price is below the MA.
These derived figures are then recombined in much the same way that csDash does to give a calculated/theoretical MA distance for each pair:
It is important to note the distinction between the actual MA distance of a pair and the derived MA distance. They are not the same:
The pairs are then sorted in order of the derived MA distance, with the pairs showing the greatest distance (either above or below) towards the top of the list.
You will also see a graph for each TF showing which currencies are "strongest" (showing greatest distance above the MA) and "weakest" (showing greatest distance below the MA)
Finally, there is a column showing active alerts. The alerting criteria at the moment is as follows (hard to explain, I'll come back and edit this later):
TF1 means Time Frame 1 (default is M1)
TF2 means Time Frame 2 (default is M5)
Yes this is our baby and it is finally in the market Good job as always Andrew
The idea behind the Moving Average Distance Dashboard stems from the fact that every currency pair is made up of 2 currencies - the base and the quote currencies. Sound basic right A currency pair therefore moves because either (a) one of the 2 currencies is weak and the other strong or (b) one of the 2 currencies is very, very weak or very, very strong. This is the basic concept taught by Mark M of Forex Early Warning.
Therefore to benefit from price movement, we want to match and trade a strong currency against a weak one as trading 2 strong currencies or 2 weak currencies will not give us any mileage. We are looking for that extra edge. Therefore I went one extra mile - I want to trade the strongest currency against the weakest currency if possible, and decided to group the popular currencies under 8 major groups with their related pairs (nothing new here as others have been doing the same thing), hoping that this will give a bird's eye view of what each group is doing. I shared the idea with Andrew and he went to work, added few ideas of his and produced this outstanding piece of work. Thank you again Andrew.
How Do We Identify the Strongest and Weakest Currencies
Each currency group has 7 currency pairs; and I will be looking for a group that is showing strength or weakness on at least 4 or more of the associated currency pairs - the more, the stronger or weaker. See this live example taken around 9 pm PST (US/Canada)
In the above screenshot, you can see that the USD group has shown consistent strength against all pairs in its group while AUD has shown equal weakness against all pairs in its group too. The next strongest is GBP and next weakest is NZD. See the resultant AUDUSD chart taken few minutes after I took the dashboard screenshot. You can also check the charts of NZDUSD, GBPAUD and GBPNZD. The advantage of the MADdash is that you can easily see and pick the strongest and the weakest.
If this looks impossible to you, check my folder directory for the time interval when these screenshots were taken - dashboard @ 9.06 pm and chart @ 9.11 pm
How do I use the Dashboard
You have seen the example of how I use the dashboard above.
A lot of traders have this wrong impression (IMHO) that moving averages lag. While this is true, we forget that nothing moves in a straight line, and every price movement must rest and retrace, during which it falls behind its moving average before continuing its original trend movement. This is the area or point of interest to me, where I turn a lagging indicator into a leading one as shown in the example below.
It is the same thing with the MADdash. I focus on the M5 to M30 time frames and wait for the M1 to diverge from them, which signifies the pullback I am waiting for. I therefore look for groups showing consistency of trend on 4 or more pairs and match the strongest with the weakest. I check the charts as soon as I see this, and like a sniper wait for the M1 TF to recycle into the M5 and HTFs, and join the trend as price breaks through S/R or PPT levels. This is the way I suggested the alert be coded - to alert us of possible setup when M5 and M15 are in agreement, so we can be proactive and start checking the charts; and a final alert when M1 recycles into M5 and higher.
Warnings and Drawback of the Dashboard
Until you get very accustomed to how the dashboard operates, you will likely be entering trends late - this is the drawback of the dashboard as well as other CSMs. This is why I believe in my humble opinion that the MADdash is superior to most CSM because you can adapt it to the moving average you use on your preferred time frame. You can also focus on few currency groups and only match them when they meet your benchmark and still make your pips.
Another warning which you should also note on the attached dashboard is the low values on all the groups hinting that this movement will not last. We need total value above 10 for any sustained movement.
Finally, the dashboard is not a standalone system; it is an entry and trade management tool. You need to have your own trading system and can plug in your preferred MA and get accustomed to how it works. From my folder directory, you can see that I take screenshots almost every 15 minutes when I'm trading and can go back to review what I could have done differently at the end of a trading day or week. And just for your information, I do not trade the one minute TF but trade the M30 candle on the M1 TF.
And a final word of caution: The main goal of trading the strongest vs the weakest is to have a small edge with momentum and price movement following. If however price is not moving within 10 - 15 minutes of entry, there is no edge in that instrument again, and should be closed as fast as possible. I will rather sit on the sidelines and wait for another opportunity than nursing a good trade gone bad and in the process, miss other good trades that will eventually come along.
Green pips and good trading to all, and I sincerely hope you find the dashboard useful in your trading.
Shalom , and God bless
Will be very busy nxt week checking this
Nice to select charts etc
Thanks and congrats to you and 919gilead
My both of you prosper
## forgot - fits nicely on floating chart on second monitor!
Many thanks to you for the initial concept of MTF MA distance, and for thoroughly testing the dashboard.
Are the ma distances calculated in pips?
Adding the pip distances of different pairs together or averaging them would not give an accurate strength value. Some pairs generally move 25 pips up and down compared to a moving average, while some other pairs generally move 10 pips, compared to the same moving average. Your method would put more emphasis on more volatile pair, compared to the less volatile pair. So the volatile pair would create a bias on your results.
So I believe your method would be more accurate using z-score values. You can easily add z-score values of all British Pounds pairs for example, and the result would be a correct value for that currency (mathematics wise).
But if you use z-scores I don't think you can calculate the "derived value" of your method.
I just wanted to make a point. Thanks
BTW, thank you both for the great job you are doing on these Dashes
This was what happened on Wednesday, June 17, 2015 around London open
The NZFCHF chart
The CADCHF chart
See similar CADCHF chart and information posted by Erebus here. He posted a 15M chart and you can compare with the M15 mini chart on the same chart I posted and see whether even if you entered late, you could still have made pips Price on my chart was 0.75368 when I took the screenshot and his was 0.74970 when he took his screenshot, a further 39 pips
It's about 10.49 pm my time, and I am going for a snooze and will be back around US open.
Thanks for your feedback - I read your thoughts as a constructive criticism, so all is good. I think free and open discussion/criticism is what leads us on to develop new and improved techniques.
I'll certainly bear your thoughts in mind about z-scores for any future development, but for now I'm going to let MADdash run as it is and see where 919gilead can take it... plus it's a convenient excuse to cover the fact that I don't have much spare time right now
Thanks once again for the comments
For anyone that missed the edit, a great post here from 919gilead about how he uses MADdash in his trading style.
MADdash was designed for a large screen.
In the future, I may well do a condensed version but for now, sadly, it'll have to stay the way it is (not enough hours in the day!)
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