(binned per thread starter's request) Currency Strength with cont
This was originally neilgroom's strategy that he shared with us in previous thread. We decided it no longer belongs in the commercial section because we are not using any paid services and that it deserves it's own dedicated thread so we can remain focused on this ONE strategy. I will try to maintain the thread as neilgroom does not have the time, however he will continue to drop in and contribute. I have copied over all the relevant information from the other thread and put it below and will continue to update this first post as needed so newcomers can have a quick reference guide on the first page.
UPDATE: Well, we've been moved back to commercial for some reason, either way, we are still not using any paid services in this thread.
Before we get into the method there are some rules that must be followed or this thread could end up like many others on this forum, a convoluted mess going 100 different directions...
1. We must stay FOCUSED on this one strategy, if you want to add on to the strategy with your ideas and indicators then start another thread, DON'T POST IT IN HERE. This is so we can all stay on the SAME page.
2. If you disagree and want to argue with someone, take it to PMs, don't start it in here, that literally contributes nothing to the thread but a mess, you'll be blocked.
3. If you disagree with the strategy itself, no need to go on a tirade in here and start calling people out, keep it to yourself.
4. If you are new, read through the first two posts before asking questions as they go over the strategy in detail and will be updated and maintained with new info.
With all that being said, we welcome personal analysis and contribution from members on the strategy itself.
ScorpionFX: Free exhaustive fundamental analysis (remember do your own research too!)
Myfxbook: Free service provided by myfxbook to show trading volume on currency pairs
Trading view: It's overal easier and cleaner to chart on trading view charts than MT4, up to you
Scorpionfx covers the 8 following currencies: USD, JPY, EUR, GBP, CHF, AUD, NZD and CAD. And For this upcoming week, our research concludes the following as the EXPECTED relative-performance for these currencies. You can go to their website on a Sunday before the markets open and get there trades or sign up by email and you get an email with just the trades on a Sunday evening. Or Monday morning depending on your time zone. I'm in the Wet and cold U.K.
Top trades from scorpionfx (this was for a previous week to match with neil's explanation below, please visit scorpionfx for updated analysis)
Don't trade on them blindly. From my research these trades are very good but some do go the other way. No magic solution here.
Now go to https://www.myfxbook.com/community/outlook
Look up the pairs scorpionfx gave you as there top trades for the week. We follow them as if they say BUY we BUY and not SELL.
Now look through each pair and you want the opposite direction to scorpionfx at.
At the top of the list where it says community outlook click the more button and click off all the exotic pairs. Makes life easier and makes it clearer.
Take for example scorpionfx have AUD/USD as a sell signal for the week.
Find the pair and place your mouse curser over it and it will display the following
We want THE OPPOSITE direction to what scorpionfx says. As in the example scoropionfx says the AUD/USD will go down through the week.
As in the example retail traders are LONG the AUD/USD. Look at the volume level. We want a percentage over 70% with a volume lever of at least 5000 LOTS. This one is perfect and an excellent trade.
If one matches wait until the markets open and wait half hour to one hour to see if in fact it's going the way scorpionfx says. If it is then TRADE IT.
I have only been trading this way for two weeks so nothing is really proven but In 12 trades I have done in those two weeks I have only closed one trade for a small loss. The USD/CAD. It is going in the direction now, so maybe I shouldn’t have closed it. Another reason I did was cause the USD and CAD where very strong currencies at the same time.
I hope this helps... One thing I like about it is you haven’t got ONE bloody indicator on the chart.
I do admit I use the RSI indictor sometimes but for not what it is intended to do. That will be another thread one day. HINT: Never use the default setting on any indicator on MT4. Use 2 or 3 or 5.
Futher information from neilgroom on the strategy.
Don't forget myfxbook is a long time rating.. You need a high percent and high volume. Anything above 5000 volume. I've seen one pair last months with a 90% and very high volume.
Some pairs will have a 90% plus rating but the volume is so small it will go any way. With the crowd or against them
The USD/CHF went down yesterday. A pair has to go down to go up again. Has to go up for it to go down again. Supply and demand.
It takes time to get used to it.. The only pairs at the minute are the USD/CHF and EUR/CHF
For something simple add an RSI period 2 to the daily chart or if you want long term add to the monthly chart. ONLY myfxbook pairs over 70% and with volume of 5000 or more.
https://uk.tradingview.com/chart/lSwgmVJD/ and add RSI period 2 hlc3
Something for you to do when the markets close. It mega filters them. Now here is the magic. We do the complete opposite of what the RSI is designed for.
The higher the rating the better for buy and the lower the rating the better for selling. Don't use the RSI trick on mt4 though
The arrow on the chart is when myfxbook were selling it big. Mega pips for us.
Daily chart USD/CHF
An example of where retail traders are buying GBPUSD, we go against the heard of retail traders (contrarian).
The green sloping line was when retail traders where buying it..
Some last points...
Always do your own research in addition to the process outlined above! Remember, the FX-market is the most complex and unpredictable financial-market of all. And it is IMPOSSIBLE to guarantee that a currency will move in any particular direction, or in any particular manner. Therefore, it is STRONGLY RECOMMENDED that you follow proper money-management on all of your trades. Never risk more than 2% of your account. Look for a risk/reward of at least 2-1.
Here is the last bit of info from neilgroom about ranking pairs strong vs weak.
How do I determine what are the strongest and weakest pairs?
I use gold as my common denominator, % of differnce in distance above or below 200 ma on 4hr chart.
Last week the USD was below the 4 hour candle which means it was very strong.. The poor GBP and CHF where well above the 200 MA with Gold.
(I really need to edit that bit.. You see time is hard for me and sometimes I rush to post things)
Edited - Last week the USD was below the 200 MA on the 4 hour candle with Gold which means it was very strong
This is done only once per day. Take the last 4 hour candle on tradingview chart.
If MT4 had these charts an easy indicator could do it for you and update it throughout the day... So we just use the last 4 hour candle and the rating is the rating for the next day.
I'll try and do the ratings for later.
Now this is Scorpionfx ratings for next week and here are mine based on the RSI period 2 HLC/3 from tradingview chart.
If only we had these ratings at the beginning of last week...... WOW
and here are mine
Not much difference
Now what we need to remember is a strong currency will become the weakest over time and vice versa.. Have you ever notice how the JPY can one week be mega strong and the following weeks very weak. powerful stuff there if you can catch the change
I'll do the GOLD ratings when I get chance but there won't be much difference from those above
transfering my latest post from old thread to new thread......
My pairs to trade this week using Neils contrarian strategy are:
1) USD/CHF - BUY (93% - 14,279 vol)
2) NZD/USD - SELL (89% - 6,229 vol)
3) GBP/USD - SELL (79% - 8,368 vol)
On Monday we have NZD "Inflation Report" - This report has come back around "as expected" for the last 5 reports....so possibly not much movement on NU on Monday especially since on Wednesday we will have a BIG NZD NEWS day. On Wednesday we have Reserve Bank of New Zealand releasing their Cash Rate, Monetary Policy Statements, Rate Statement and a Press Conference.
On Thursday we have BOE "Inflation Report", MPC Bank Rate Vote, Monetary Policy Summary and Official Bank Rate.........From what I've read BOE was at a 90% chance of raising rates in May but it went down to about a 10% chance.....but then I recently read this, "the possibility of a 25-basis point increase in the Bank rate next Thursday shouldn’t be totally dismissed as the BoE could raise in May, arguing that it is looking ahead to future inflation expectations" Most likely there will be no "rate hike" in the Interest Rate, but you never really know for sure. An unexpected "hike" could have a big impact on the GBP market.
Also I would keep an eye out on the USD.....Trump gave himself a deadline of Monday the 14th (im pretty sure) to either continue on with the Iran Nuclear Deal or to withdraw from it. If the release of this news comes out this week, this too will most likely have a big impact on the USD.
Please take my advice with a grain of salt....I'm new to FA and I'm still learning. THanks Neil for all of your guidance
Osjoe2, be vary firm on what's acceptable, other than that, I wish you the very best of luck.
Awesome works OSJOE. Thank you so much. I will post here and answer any questions as and when I get time. As some of you already know I trade full time for a living and my family and friends come first and take up all my free time.. So I mega thank osjoe for opening the new thread,
Now here is some more proof on how powerful this method can be. Always go in the opposite direction of what the retail traders are doing. This is an old graphic I just found on my computer. A 500 pip drop when the retail traders where buying it. The grey above are what the retail traders where doing. BUYING IT.
Remember though that the London forex market will be shut on Monday 7th May.
With the new MetaTrader 5 you can create custom symbols for the currency Indices.
The formulas are:
EURLFX: USDLFX * EURUSD
LFXJPY: USDJPY / USDLFX
GBPLFX: USDLFX * GBPUSD
AUDLFX: USDLFX * AUDUSD
NZDLFX: USDLFX * NZDUSD
CHFLFX: USDLFX / USDCHF
CADLFX: USDLFX / USDCAD
It’s a bit above me. if anyone can try it.
Or use https://uk.tradingview.com/markets/c...s/indices-all/ and click on DXY ( THE USD) and then click on interactive chart.
The DXY index has a rating of 75.21 at time of posting this under my currency strength formula.
I prefer tradingview charts to MT4 charts.
Re: boe they won't be raising rates.
UK Gdp weaker
UK Lower inflation
If you are interested In the 'probability of rate rise' its derived from overnight swap rates. UK = SONIA
Re: vs USD depends on your appetite for pullbacks (Usd) and selling strength (gbp eur)
Use breakdown of commercial etc as should inversely correlate myfxbook....
I'll leave Dave to decide if he wants to explain the cot report, but in a nutshell the data is downloaded onto excel, then number crunched comparing the latest and previous report.
An opinion is then formed for each currency as to whether it has strengthened or weakened from the previous week. The cot report is probably outside the scope of this thread although the net result may well be the same.
If you go up the tf's you can see where they drop before it sells off and buy before the move up.
Hey Stimpy....probably not a good idea to mix the COT stuff on this thread. I have never used the COT in a contrarian form before. So anything I post would be untested and just clutter the thread.
PS I prefer to use the COT info as its free and it is referring to the big players in the market. But keep in mind the data they publish on Friday is actually received on Tuesday. So it is a tad late but with big moves from the big boys you can catch some pips.
Awesomeness, I'm in!
The US Dollar has completed the largest three-week rise in nearly two years. Will it continue.
ones to look out for this week.
Sentiment is changing a bit on the USD off myfxbook so retail traders might be starting to buying the USD. So it might drop a bit.
JPY is getting better with more selling it and not buying. The volumes are low though.
My theory is until Tuesday the USD will fall a bit until London opens on Tuesday.
As I say the USD will fall to all newcomers. I mean the USD index. So the GBP/USD will rise and USD/JPY will fall.
I'm waiting for Tuesday and London really rules the forex market and with it being closed Monday the markets might go either way.
I should of said those are the sentiment pairs to watch out for, for the USD.
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