FXCM/DailyFX Signals and Strategies

DailyFX launched a free mobile price alert and news alert feature through the website yesterday. http://www.dailyfx.com/alerts.html

Please feel free to send me feedback on what you like about it , don't like , etc.

-Jason

FXCM is currently beta testing free VPS for MT4 accounts. If you have a live MT4 account with FXCM and would like a free beta test, please private message me.

Jason

Here's the newest SSI release today at 16:57:55 GMT

For the sake of all here, can u interpret for us this particular SSI release?

Thanks for sharing.

Sure thing. Was going to write up a little something yesterday, but was pressed for time

What is SSI?
SSI (stands for speculative sentiment index) shows you FXCM's trading book: what our traders are trading. At a glance it will tell you net positioning for the major currencies, open interest for the major currencies and the daily percentage change in longs and shorts. We added the GBP/JPY recently to the statistics since it has become a popular pair for our traders. (more popular than the commodity currencies)

Positioning
This shows a ratio of longs to shorts. Look at yesterday's USD/CAD ratio of 3.40. This indicates that long orders exceed short orders by a ratio of 3.40:1. If the position number is negative, for example GBP/USD being -1.70, that means that short orders exceed long orders by a ratio of 1.70:1. Not very extreme. We consider a ratio of 3 or higher to be extreme or of note where the market is becoming one sided..

How to use the data

I've seen traders apply different strategies to it, but we see it as a contrarian indicator. More long positions doesn't necessarily mean a continuation of the trend. I'm sure many of you can think of times when you've tried to pick tops and bottoms. This is especially common among retail traders. Second, many traders tend to increase the size of their position as the market moves against them in an attempt to average down the entry price to recoup losses. USD/CAD is a good example of traders trying to pick a bottom at an important support level around the 1.07 - 1.08 level. But a word of caution, whenever volatility decreases and the market starts to range trade, then SSI will probably not work as a contrarian indicator. So it will be good to use it as a part of your larger analysis.

Where to find SSI?
SSI is updated twice a day (early morning and late afternoon) in the DailyFX+ signals area. You need a live FXCM account to access it, but you can register for a free trial through our website if you want to login to test it.

There is also a once a week update for everyone on the main page of DailyFX.com. It goes into a longer trading horizon in the analysis. This report is updated every Thursday. Here is the most recent one.

Cheers,

Jason

Highlight of the day from SSI

GBP/USD longs increased by 74% today. Net positioning flipped from negative to positive today as well, so the majority of traders are now long GBP/USD on the heels of todays 200 pip pull back in GBP/USD. Contrarian indication would call for a continued drop in GBP/USD.

Extra Note: Also you may find it interesting that some of the trading signals in DailyFX Plus (Momentum 1, Momentum 2, Range 2 and Breakout 2) incorporate the SSI data to help generate signals.

So the contrarian indicator worked well with GBP/USD sliding another 200 or so pips. Positioning has stayed around the same at 1.14. Long positions increased only 1% and shorts decreased 7%. This could mean that we have seen profit taking by shorts, and those that went long yesterday are holding on to their losses and waiting for NFP which comes out in about 5 minutes.

Daily SSI Update

GBP/USD remains at 1.28 with with a slight decrease in open interest. Nothing too dramatic so traders are holding onto their losing positions which they added yesterday.

What I find more interesting is that there was a 45% increase in short positions in GBP/JPY. Net positioning stood at -1.14 at 4:34am this morning, and then at 1:46pm today positioning in GBP/JPY became -2.52. So traders increased their short positions into today's GBP/JPY rally. Today's GBP/JPY daily candle could close above the previous high from early June which be a new high in GBP/JPY for the year.

Attached is a snapshot of the current GBP/JPY signal


Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. The FXCM group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance contained in the trading signals, or in any accompanying chart analyses.

Time for the SSI update.

Just looking at the GBP/USD and GBP/JPY numbers from Friday to today. It looks as though our traders have done well picking the GBP/JPY movement, but have continuously tried to pick a bottom in GBP/USD. If this trend continues, GBP/USD may see another sell off and GBP/JPY may reverse today's sell-off.

If anyone is using Twitter to follow FX news events, you can add the forex stream to your twitter following. Twitter ID: DailyFXTeam

Or following from the website http://forexstream.dailyfx.com/

Join John Kicklighter of DailyFX for a live trading discussion and market analysis during today's FOMC rate decision. No change is expected to the fed funds rate, but the communique released by the FOMC should be very important about the outlook for inflation, economic growth, and interest rates.

http://farm3.static.flickr.com/2519/...e0b063666f.jpg

If you want to view level II type depth of market in the forex market, it is available on the Active Trader Platform. Here's a snapshot of the quote board:

http://farm3.static.flickr.com/2475/...0412b06fe1.jpg

Here is where you can register a demo to view it in real time and practice trade http://www.fxcm.com/active-trader.jsp

There's a weekly SSI report released every Thursday that gives a longer term view on the currency outlooks using SSI data. Click Here to Access

Here's a snapshot of the USD/CAD analysis. Retail traders have consistently been long the USD/CAD and near extreme positioning levels (3 or greater). Positioning number tells you the number of orders long compared to short. SSI is contrarian because it goes against crowd sentiment, and USD/CAD is testing support near 1.08

Took the below screenshot around 10:50am. Volume picking up in the EUR/USD and GBP pairs. The volume indicator for the DailyFX Plus Trading Signals is measuring current volume executed relative to average volume executed over the past week.

For anyone reading through the discussion, the signals and SSI data is found in DailyFX Plus. Typically you would need a live account to access the information, but we have a free trial you can register for. Here is where you can register: http://www.fxcm.com/trading-signals.jsp

Goto step 2 at the bottom of the page to register for the free trial.

Quick SSI update:

Majority of traders still trying to pick bottoms but the data is not heavily skewed. Remember that a reading of 1 would be there is one order long for each order short or vice versa if you see -1. The positive or negative sign simply tells you whether orders are net long or net short. Seems like traders have generally got direction wrong by a small amount except for USD/CAD which has rallied along with traders long positions.

Thanks Jason
These are really good

You're welcome!

I just noticed the currency buttons in your signature that lists the market sentiment, and I find them intriguing. Do you have an automated strategy/website that creates signals based on this or are you updating it manually based off of your own analysis?

Will give an update on SSI this afternoon. Nothing's jumping out at me from this morning's SSI.

On another note, this week I'll give some details on the Forex System Selector (also known as FSS). It's a platform FXCM released back in mid-2007 if my memory is correct and can be a little intimidating at first.

Basically, the platform gives you access to over 40 back-tested systems, and you can select systems out of that list to automate trading on your account. It's a web based platform so you can access it from anywhere. If you like MT4 and Expert Advisors (EA's) then this may be something else for you to look into.

Below is a picture of the main page of the interface, and the three positions were opened manually by myself. So these were not opened by systems. The starting balance defaults to $100k but you can change it to whatever you want when registering for a demo. Here is the main webpage http://www.fxcm.com/forex-system-selector.jsp

I will add more posts throughout the week on how to add systems, where to review the performance, etc. So stay tuned...