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-   -   An indicator for the strength of a currency (https://www.forexfactory.com/showthread.php?t=925836)

Rafei Jun 18, 2019 11:46pm | Post# 1

An indicator for the strength of a currency
 
7 Attachment(s)
Dear All,
Hi.
I have created a new indicator which shows the strength of each (individual) currency based on change percentage. Change percentage of each currency at any time (in a day) according to the open price of the day is calculated according to the following formula:

(the formula is edited)
for ( j = each pair of currency )

currency[i] = currency[i] + ( iClose( Pair[j] , Period() , i ) - iOpen( Pair[j] , PERIOD_D1 , dayCount ) ) / iOpen( Pair[j] , PERIOD_D1 , dayCount ) * 100;


Here is a view of the indicator:

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About the figure:

- Colors:

AUD: Blue

CAD: Red

CHF: Green

EUR: Gray

GBP: Orange

JPY: Brown

NZD: Aqua

USD: Black

- Each signal (curve) belongs to one currency (not an individual pair).


I notice to the followings:

  1. The sum of the buffers (currencies strength) at any time is zero! This shows the balance of the system.
  2. If the idea is that the strength of a currency is to be increased, that currency should be bought.
  3. If the idea is that the strength of a currency is to be decreased, that currency should be sold.
  4. An example of buying USD, for example, is: Sell(AUDUSD), Sell(EURUSD), Sell(GBPUSD), Sell(NZDUSD), Buy(USDCAD), Buy(USDCHF), Buy(USDJPY).
  5. An example of selling USD, for example, is: Buy(AUDUSD), Buy(EURUSD), Buy(GBPUSD), Buy(NZDUSD), Sell(USDCAD), Sell(USDCHF), Sell(USDJPY).
  6. If the strength of a currency is to be increased (decreased), all pairs of that currency should be bought (sold), otherwise, there is no guarantee to gain profit from this trade.

Still, there is an ambiguity in trading with the help of this indicator. I have no idea when the strength of a currency is to be increased or decreased. I didn't find any general template or strategy to trade with this indicator.
I share the indicator here to find a way or strategy to trade with the help of it.
Please share if you have any idea.

Please, if you attach the indicator to a chart, refresh all the other (27) charts to update and download tick data.

Weekly indicator is added. In this indicator, the opening price of the week is considered to measure strength or weakness of a currency.

*** Strength Percentage

Version 1.00: is archived.

Version 1.01: Code is optimized for faster calculation and lower memory (is archived).

Version 1.03: Vertical line and alert flags are added (is archived).

Version 1.04: Alert + Vertical line + Signal color (is archived).

Version 2.00: Symbols prefix and suffix + Session indicator + Currencies Label + Current pair detection (Description here).

Daily strength indicator:
StrengthDaily200.ex4

*** Pips

With the help of comments, I have created a new version of the indicator which calculates the pips changes for each currency. This indicator gives exact pips when we trade a currency.
In addition, a new feature is added to the indicator, which is drawing the vertical lines with user defined periods. The problem of vertical lines is solved. This helps the trader better know how the currency changes in periods:

Version 101: is archived.

Version 102: is archived.

Version 104: Alert + Vertical line + Signal color.

Daily pips change indicator:
StrengthPipsDaily104.ex4

Weekly pips change indicator:
StrengthPipsWeekly104.ex4

*** RSI

The RSI of the signals are calculated in this indicator. RSI period can be determined by user. The currencies can be chosen to be displayed or not.
(Bugs are fixed and the indicator is rewritten.)

RSI of pips change indicator:
CurrencyRSI101withVLine.ex4

*** COT of strength (Currency Strength Index, CSI)

Version 1.00: is archived.

Version 1.01: Symbols prefix and suffix + Session indicator + Currencies Label + Current pair detection.

Daily CSI indicator:
CSI101.ex4

*** Archive

CurrencyStrength.zip


Rafei Jun 18, 2019 11:59pm | Post# 2

1 Attachment(s)
Here is an example:

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At 14 June, after 15:30', we could gain profit if we bought USD.
At 17 June, after 15:30', we could gain profit if we sold GBP.

Rafei Jun 19, 2019 12:20am | Post# 3

8 Attachment(s)
Another example which shows the weakness of GBP compare to its counterparts:

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Rafei Jun 19, 2019 12:36am | Post# 4

8 Attachment(s)
Another example which shows the strength of EUR against its counterparts:

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Rafei Jun 19, 2019 12:50am | Post# 5

8 Attachment(s)
Now AUD is the weakest.

Can we trade with this signal and sell AUD?


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HumbleLearne Jun 19, 2019 1:10am | Post# 6

Very good Sir Subscribed ,

Sir if its not to much can we please have just simple arrow programmed in your algorithm green for buy and red for sell if the above criteria is met for the specific currency if possible please ....for example when i put you indicator on EURUSD and the currency strength wave has reached overbought condition and you get big red arrow for sell and vise a versa is it possible please

Rafei Jun 19, 2019 1:48am | Post# 7

Very good Sir Subscribed , ... is it possible please
Yes it is.

But, as I said in the early post, this indicator shows the strength or weakness of a currency based on all other (major) 7 counterparts. So, it should not be interpreted as a single pair signal provider.

For example, you see that EUR is the strongest and also, is getting stronger. If you buy EURUSD, there is no guarantee to gain profit from this just trade! But, if you buy EUR against all other counterparts, you will take profit for sure (because of balance in the system)!

It is good to mention that, it is not important that a currency is the strongest or weakest. But, it is important to know if the strength of a currency is getting higher or lower!

Rafei Jun 19, 2019 2:13am | Post# 8

The question is that, how to know if a currency is getting strong or weak!?

When do we buy a currency and when sell it?

HumbleLearne Jun 19, 2019 3:37am | Post# 9

The question is that, how to know if a currency is getting strong or weak!? When do we buy a currency and when sell it?
Over bought condition as per you indicator +5 and over sold condition -5 you you can use that as trigger in addition you can use fast stochastic indicator & WPR for first and second confirmation as per their overbought and oversell conditions ..what do you say is it possible ?????

Rafei Jun 19, 2019 3:56am | Post# 10

{quote} Over bought condition ... say is it possible ?????
I have no idea about over-sold and over-bought conditions. In over-sold and over-bought conditions, you compare two waves which one can be an indicator. How do you interpret +5 / -5 as over-bought / over-sold conditions!? In addition, +5 / -5 for a currency in my indicator is rarely happened!

I don't think that there is any subject of over-sold and over-bought in trading currencies! Currencies changes according to the government policy and asks / bids. When we trade currencies, we do an exchange, we do not sell or buy anything. Actually, over-sold and over-bought conditions are for stocks! Currencies are tighten together as a chain and move inside a curved sphere.

Because of balance, if asks for one currency increase, bids for other currencies increase.

My idea is to consider those levels in the indicator which the strength signal touches more and react to them, specially, round levels such as 0, 0.5, 1, 1.5, 2, ... .

HumbleLearne Jun 19, 2019 4:13am | Post# 11

{quote} I have no idea about over-sold and over-bought conditions. In over-sold and over-bought conditions, you compare two waves which one can be an indicator. How do you interpret +5 / -5 as over-bought / over-sold conditions!? In addition, +5 / -5 for a currency in my indicator is rarely happened! I don't think that there is any subject of over-sold and over-bought in trading currencies! Currencies changes according to the government policy and asks / bids. Actually, over-sold and over-bought conditions are for stocks! Currencies are tighten...


"
My idea is to consider those levels in the indicator which the strength signal touches more and react to them, specially, round levels such as 0, 0.5, 1, 1.5, 2, ... .
"
Yes even thats brilliant idea but but OB & OS are on every instruments as per my analysis But you can still implement the above idea and we will we see how it benefits as we go

i would appreciate if you be kind enough and post exact entry and exit rules for buying and selling both clearly which can be very useful for testing as we go

Rafei Jun 19, 2019 4:20am | Post# 12

{quote} " My idea is to ... as we go
Thanks for the replys .

Actually, I am here to learn how to trade based on strength and weakness of a currency .

I tried trading (on real account) based on round levels, but there is still some doubts on trades.

I am looking for a general template (strategy) based on the indicator!

Please, share your idea about trading strength or weakness of a currency.
Thanks.

Rafei Jun 19, 2019 5:15am | Post# 13

2 Attachment(s)
{quote} ... post exact entry and exit rules for buying and selling both clearly ...
As an example of buying / selling a currency, here is AUD and NZD.

Today (19 June 2019), at 10:40', the indicator shows that AUD and NZD were getting weaker and so we could sell one or both of them.

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If we were going to sell AUD, we should did the following trades at the same time:

Sell -> AUDCAD
Sell -> AUDCHF
Sell -> AUDJPY
Sell -> AUDNZD
Sell -> AUDUSD
Buy -> EURAUD
Buy -> GBPAUD

From this time, if AUD gets weaker, then sum of the trades will be in profit.

After some minutes, AUD signal is at a level which can be considered as exit level:

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You can follow and check the AUD charts in the time interval from 10:40' to 11:30' .

HumbleLearne Jun 19, 2019 5:21am | Post# 14

{quote} As an example of buying / selling a currency, here is AUD and NZD. Today (19 June 2019), at 10:40', the indicator shows that AUD and NZD were getting weaker and so we could sell one or both of them. {image} If we were going to sell AUD, we should did the following trades at the same time: Sell -> AUDCAD Sell -> AUDCHF Sell -> AUDJPY Sell -> AUDNZD Sell -> AUDUSD Buy -> EURAUD Buy -> GBPAUD From this time, if AUD gets weaker, then sum of the trades will be in profit. After some minutes, AUD signal is at a level which can be considered as...

Hummm ...impressed getting it some part of your brilliant mind now lets check do you have SOP or Draft or WIP ???

Rafei Jun 19, 2019 5:23am | Post# 15

1 Attachment(s)
Now, from indicator, AUD comes back to the last low level and this may be a level for selling AUD again!

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Rafei Jun 19, 2019 5:27am | Post# 16

{quote} ... do you have SOP or Draft or WIP ???
Unfortunately, I didn't trade this signal and have no draft. One can check the levels at the chart.

HumbleLearne Jun 19, 2019 5:42am | Post# 17

{quote} Unfortunately, I didn't trade this signal and have no draft. One can check the levels at the chart.



Read this seriously implement it https://www.tradingheroes.com/forex-trading-plan-guide/ ACT ACCORDINGLY and then proceed if you want to succeed

Rafei Jun 19, 2019 5:53am | Post# 18

{quote} Read this seriously implement it https://www.tradingheroes.com/forex-trading-plan-guide/ ACT ACCORDINGLY and then proceed if you want to succeed
Thanks for the link. I have read the article. The article states the basics and initials to be a successful trader. I really appreciate your attention, but, is this the answer of the question stated here?

I did some real trades according to the indicator, in some cases I detected the trend truly and in others I was at the wrong direction. I can't find any reliable trade strategy based on this indicator.

Please, I am discussing the fundamental of strength and weakness of a currency and how a currency may manner when it is getting stronger or weaker.

My formula is stated in the early post. Is this formula correct? If yes, how can we interpret the signals?

How can we trade with currency strength (weakness)?

Any idea?

Pivot Ruler Jun 19, 2019 11:42am | Post# 19

Hello Rafei,

Thank you very much for your help with showing the currency strength through an EA.

Our main goal is to figure out where each pair is going to end up. If you're looking for short term or long term trades. I have been researching the Ichimoku Cloud trading method for about 3 months, and the pairs I look at are the pairs that trend a lot. If you want to learn about this method, it might just add some insight into where the pair is heading.

Take a look at this video to determine the trend that the ichimoku will show you. (It tells you the future) I tried it on EUR/USD, EUR/JPY, GBP/JPY, GBP/USD, GBP pairs, EUR Pairs, and NZD Pairs There are some pairs that is doesn't work well with because these pairs don't trend, or take a long time to trend. You can figure out the pairs that don't trend. The pairs that I watch , it predicted the trend 80 to 90% of the time.

Here is a 24 minute video that will show you how it works. I use the Ichimoku on the 1 hour and 4 hour, sometimes on the 30 min chart (Depending on the pair)

Thanks again.

Inserted Video

Rafei Jun 19, 2019 2:17pm | Post# 20

Hello Rafei, ... Thanks again. https://youtu.be/X5lxBTrN-Yk
Hi Pivot Ruler,

I really appreciate your reply and your comment about using Ichi-Moku trading system. Some years ago I used to trade using indicators like Ichi-Moku and moving averages, but it is some time that I have put aside indicators and trade using support resistance and price action. Nevertheless, by watching this video, my mind really changed about Ichi-Moku thanks to your comment.



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