D-52

Inspired by people who shared their system, I'm introducing this system I call D-52.

Nick, it definetilly take you up in your offer, please code this system. I'd be very glad to share it, specially if we get the right input to make this even better.


ANALYSIS
Currencies react to the risk of aversion and risk of apetitie. The currencies that go up with risk of aversion are JPY, USD, and CHF (in that order). The currencies that go up with risk of apetite are AUD, NZD, EUR, and CAD.

We will be looking at the relative strength of currencies. Please see the bottom of the picture below with a shot of the relative strength of the major currencies (late 2008 credit crisis). Notice that the "safe haven" currencies gain strength and the "risker" currencies lost strenght, first and then as the risk of apetite took over, the riskier currencies gain strength again.

This concept can be applied to long term, mid-tem, short-tem, intraday and even news releases.

The currency that gains more strength with kisk of aversion is JPY, and the currency that looses more strenght is the AUD. I'm not using NZD because it is a litle bit messi.

AUDJPY, where the carry trade is at this time, happen to be the most volatile pair for this basic risk analysis. As a general rule most of the times AUD goes up, JPY goes down and viceverse. Please take a look to attached pictures audjpy feb 2010 (1HR frame). At the bottom you will see again the indicator for their individual relative strength (Orange=AUD, Maroon=JPY). Notice how their movement goes most of the time in the opposite direction.

INDICATORS

CCis the relative strength of currencies. Once you open a new chart AUDJPY 1 HR TF you will add this indicator and you will edit it, set all the colors to none with the expeption of maroon (JPY) and dark orange (AUD). Draw a horizontal line right at 0.000 for reference.

Notice that as a general rule when both slopes change direction ie, the orange line start to go up AND the maroon line start to go down, the currency AUDJPY goes up, and viceversa (when AUD slopes changes to negative AND JPY slopes changes to positive the pair goes down)

Cycle identifier shows the highs and lows of this pair. it has adds a green vertical line when te price is going up and a red vertical line when the price is going down. Beware, it repaints.


ENTRY
Long position









There are 3 conditions that need to be met to enter a long position:

1. AUD is gaining strenght: The orange line value at the top hour is higher than the value from the hour before, making a positive slope, or more simple, the orange (AUD) line is going UP.
2. JPY is loosing strenght: The marron line value at the top hour is lower than the value from the hour before, making a negative slope, or more simple, the maroon (JPY) line is going DOWN.
3. Buy Cycle: Cycle identifier indicator shows the price going up (the last vertical line is green). This helps to allign the trade with the trend.

Short position









There are 3 conditions that need to be met to enter a short position:

1. AUD is loosing strenght: The orange line value at the top hour is lower than the value from the hour before, making a negative slope, or more simple, the orange (AUD) line is going DOWN.
2. JPY is gaining strenght: The marron line value at the top hour is higher than the value from the hour before, making a positive slope, or more simple, the maroon (JPY) line is going UP.
3. Sell Cycle: Cycle identifier indicator shows the price going up (the last vertical line is green). This helps to allign the trade with the trend.

Exit: TP 30 pips, SL:30 or trailing stop=30.



I preffer to use it with the trend

More info, trades, and pictures to come

Looks interesting. Repaint is always a problem. I'll look again Monday, you have jumped off in a new direction, and that may not be a bad thing.

See the attached pictures for these week trades.

I use Forex TRM to see where the short term trend is going. This past week the trend was showing uptrend.

Trade 1, the entry position is marked by the vertical line. Open a AUDJPY chart in 1HR TF, add the indicators, turn off the relative strength for all the other currencies, and then see that last Friday, 6 hours before the market closed, the relative strength of these two pairs changed their slope.

AUD went from -0.0167 (the value from the last our)to -0.0166, (put your mouse arrow right above the AUD strength line). JPY went from 0.0051 to 0.0037, check this value, those are 2 out of 3 conditions that we need for a buy signal. The last condition is to check the cycle identifier and see if we are in a buy or sell area. In the attached picture, notice that right above "12 Feb 11:00" we have a cicly change with a green vertical line. That is our third condition.

We enter this trade @ 79.66

Exited @ 79.96, before the end of the week.

More info, trades, and picture to come

Bankshot, thank you for your reply, you are welcome to try it and add more fedback.

Notice that we use this indicator to allign our trade it with the trend, we do not based this system on that indicator. The cycle identifier find the highs and lows for us.

Notice that green vertical line next to a number 2, this is the entry.
AUD changed its slope to positive, it went from 0.0012 to 0.0018 and JPY went from 0.0024 to 0.0010. The last cycle is green, so our entry is at 79.96.
The exit was at 80.26

See the vertical red line with a number 3.

AUD changed the slope from positive to negative, it went from 0.0427 to 0.0420, JPY had a positive had a positive slope, it was confirmed (it went from -.017 to -0.0156), this happen at the same time we a cycle change signal.

It would of been a succesful trade, but it was against my short tem trend and I don't trade 24 hs. That's why I take you up on your kind offer Nick, make it trade for me, while I sleep.

Please explain how you use your trailing stop of 30. Do you move to BE when + 30 and then to 30 when +60? This will affect your results above.

See the picture from my last post.
See the green vertical line next to the number 4.
Here pay attention to the AUD line slope, it changed from negative to positive. it went from -0.0005 to 0.0003. It also went from a negative number to a positive number, which is not required, but it helps.
Relative strength is not a direct reflection of price, it would be way too easy, huh?
A lot of times you will see that a relative strength of a currency goes down. The price might not be going down, this happens just because that the other currencies being related to (major currencies) are moving.
See this analogy. Throw a tennis ball up, first it will go up with a it's own inertia, then when the inertia is over, it will just to down. You can also throw it down, then it will go down because if its inertia plus gravity effect. This is what we see with relative strength.
Now going back to the entry point, AUD is going up now, JPY was going down, we can confirm the last value, 0.0053 is lower that the value it preceeded (0.0083). Last the fact that we see a buy cycle (short green vertical line at the bottom, next to the timeline) help us to allign the trade with the trend).
The entry price was 78.72, and the exit was 79.62. I took this trade with 90 sweet pips
Hope you can understand, I'm not a writer, nor English is my first language, but I want to share this system and make it better with the right input.

See the next picture with a number 6
Slopes from AUD and JPY changed right at the green vertical line.
Pay attention to the orange line, AUD, it reversed its slope from negative to positive, it went from -0.0087 to -0.0083.
JPY did the opposite, it went from positive to negative. From 0.0108 to 0.0098. showing a reversal. Last, the auxiliar indicator, cycle identifier, shows a buy cycle at the bottom.
That was a neat buy signal.

I entered this position at 77.30 and I used a trailing stop.
The trend went over 78.50, and my my S/L was 78.20, made 90 pips

What is Forex TRM?

Does the Cycle Finder repaint?

Picture for last post

I'm 98% certain that it repaints, without waiting for your answer.
Every one of its spikes are at an exact price peak or valley.

You are absolutelly right, like it says in post #1 it does repaint, but remember that we look for an entry position based on the currency strength, we use the cycle identifier to see the immediate peak or hill

Post #1 does say that.
My apologies. I missed it.

What is Forex TRM?

I still doubt the CCI indicator, can you explain how the CCI read a trend reversal?
usually I use overlay indicator if I want to see correlation between pairs

This is ex correlation chart AUDUSD + USDJPY = AUDJPY



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Chaikin Money Flow

It is a a paid service that I am NOT trying to sell here. when you goodle it, That would be the first one on top.

It helps me to decide where the momentum for the trend is going, It anticipates the reversals very well, but it "re-adapts" according to their customer service, or the way we say it, it repaints. It takes several months to learn to read the charts.

I apologize if you believed I made it confusing the way I wrote it.

What i do is simply, if I have time to stay in front of the computer, I don't see a cycle change in the cycle identifier indicator, and the relative strenght moves in the same direction then, I move my T/P.

If I don't have time, then I just use 30 trailing stop.

Can we use this on any other pair.. My Broker doesnt support AUDJPY....

Reachjj,

AUDUSD is less volatile and it will give you less oportunities, that been said, it would work, but I would try with S/L=25 and T/P=25 or trailing stop=25 in the 1hr TF.

Can we use it on GU or EU as they are also very much volatile.... during London sessions and starting of US sessions....