Money flows: Trading the strongest / weakest major currency cross

I'm beginning to understand trading flows is a very scalp based method.

The primary consideration for most fx wannabes is that we do this on a part time basis. As unknown4x mentioned, u can spot flows 3-4x a day. This ultimately means you need to be in front of your screens n ready to scalp at an instant to catch these 3-4 flows each day. And most likely, you will miss these A* setups & end up trading suboptimal ones. This is where most of us will lose money & give up after a few months.

To me this meant alot of unmaximised time waiting for such flows. My personal conclusion is that this mtd is best served by at least some form of semi-automated trading, with alerts being the v least u need to trade this part time. If you insist on discretionary trading, a way to maximise time is to trade the -1.to +1 hour around london open & us open, when the markets r more active. and believe it or not, right after major news releases. HOWEVER, NEVER during the widening of broker spreads. watch the flows during the release & wait for spreads to normalise before trading.


cheers

I experimented with a way to use flows on a longer term basis (other than scalps).

For eg. a live long trade unfolding now on usdjpy, targeting the next defined level. I see a H1 double bottom on usdjpy & a successful breakout retest of the neckline. Using the flows concept of trying to gauge which pair to trade, a look at other majors r also confirming this breakout of their own inner trendlines. Choosing which pair to trade is subjective. I look for structure. swissy has the best structure, but it is my personally choice not trade it. Apart from it, usdjpy holds the best looking structure, followed by euro & cable. Hence the usdjpy choice.

However, usdcnh looks bearish. The better choice would have been to long cnhjpy, which has no market. This can still serve as a warning any usdjpy upside is limited.

For a more comprehensive view, look at yen pairs & other assets like gold, oil, cad, aussie, kiwi etc for the strongest/weakest flow. This is just a brief eg. I am increasingly feeling that fx flows r mostly dollar based. It is the world's reserve currency. I would only trade minors if nice structures formed. I try not to over complicate & look at too much by including yen pairs.

Another way I use flows is to track the stronger/weaker pair. For eg the above usdjpy was overtaken by cable. pound is stronger than dollar but capped by a line. Looking at gbpjpy, it is capped by a H1 supply zone above. This may imply usdjpy may turn before reaching my tgt.

Once gbpjpy reaches this line, I will set my usdjpy long to breakeven. And then reassess which is the strongest/weakest pair at that moment to track if their correlated flow affects my original trade.

usdjpy fell short of my tgt before turning on a much better than expected nfp. I moved my stop to breakeven. price then proceeded to taking out my original stop. This implies bearishness. looking to short usdjpy on pullbacks.

interesting

Interesting. Could someone please explain which minor crosses to observe if i trade EURUSD ans GBPUSD?

EURAUD EURNZD EURCAD EURJPY

Same for GBP.

from my observations on watching money flows as a tool for trading, unknown4x intentions were to use it as a tool for short-term trading

& I understand why. when trading flows for longer term swings, the breakout of a flow will only act as an entry trigger. such flows usually do not carry on forever. they will wane after awhile & the market finds new equilibrium. until another major flow happens which may or may not benefit your original trades

therefore, I recommend trading the breakout of flows by taking a few trades (diversification) & on the back of structure (MOST important). for eg. a USD outflow happened after nfp last fri. my charting tells me eur, nzd, chf are blullish on the weekly chart. I will therefore initiate long positions in eurusd, nzdusd & short usdchf. after that, I will manage these trades & 'hope' that one of them becomes a homerun.

in short I use flows as a reason to enter & position myself for further momentum

Hey these are indexes weighted from recent volume reports by BIS(?). Cant remember exactly, they were created by someone smarter than me. But you can enter these codes into tradingview and see the index.

USD
1000/(10.33912*AUDUSD+9.41888/USDCAD+37.64446*EURUSD+15.55298*GBPUSD+33.51789/USDJPY+3.86579/USDCHF)
AUD
1000/(5.68174*EURAUD+11.91357/AUDJPY+62.14286/AUDUSD+5.95292/AUDCAD+2.25803/AUDCHF+12.05088*GBPAUD)
CAD
1000/(5.21011*EURCAD+2.65343/CADJPY+71.47119*USDCAD+7.51543*AUDCAD+2.07512/CADCHF+11.07472*GBPCAD)
CHF
1000/(20.12333*EURCHF+45.35503*USDCHF+3.20848*AUDCHF+4.40767*CADCHF+17.52038/CHFJPY+9.38512*GBPCHF)
EUR
1000/(1.93152/EURAUD+1.40295/EURCAD+8.02264/EURGBP+8.2204/EURJPY+76.91788/EURUSD+3.5046/EURCHF)
GBP
1000/(13.41919*EURGBP+53.15554/GBPUSD+6.85245/GBPAUD+4.98811/GBPCAD+2.73393/GBPCHF+18.85077/GBPJPY)
JPY
1000000/(4.22795*AUDJPY+0.74589*CADJPY+8.58148*EURJPY+71.49443*USDJPY+3.18531*CHFJPY+11.76494*GBPJPY)

JPY index


cross pairs at potential reversal zones the same time JPY index reaches its own PRZ. (usdjpy and gbpjpy are high volume zones, cadjpy is a supply zone and flip zone)


Also its nice to stack pairs on top of each other and overlay each currency's index. The position of the everything is irrelevant as it will change with the zoom, only the slope matters

credit to DerPat at SHF, sadly he delete that interesting thread.

Pat didnt delete it, I think Steve did. Either way the first page of the thread can still be found using archive.org

Rudy,

Could you kindly mention the thread name you are referring to?

Thanks

I have a word DerPat brilliant posts back up. If interested please PM me.

http://web.archive.org/web/201611100...hp?f=16&t=4964

Jusiur,

I sent a pm.

Thanks

@ aaven & Botan.
This thread, DerPat ex-thread and maybe another 2 ones are the best in the S/W analysis however after a long time (maybe years) of thinking that an analysis of strength and weakness would guide or improve my trading performance I could personally come up with similar conclusions from DerPat before its thread was no longer available. Price biased maybe by other elements like bias and FA goes before s/w analysis, not the opposite
It can be used as a filter but would have no more validity than the analysis of any index especially dollar index. Personally I no longer give it the importance I gave before because it is not real guide and gives a false sense of security. Also already leave of any possibility of use of any strength meter, they are just utopic code in a endless time based enviroment.

Yeah I kinda agree. Even looking at flows in real time to see what is happening doesn't mean that its going to keep happening for the next 20 pips. I do believe there is an edge to it but how I will most likely continue going about it is sort of what you mentioned, just analyzing indexes and looking for where multiple indexes or an index with a few pairs match up at a potential reversal zone. I can't analyze too many charts at once. And really what more do you need than having a PRZ on both an index and one of its pairs?

last Monday strongest/weakest pairs H1 was gbpusd and eurgbp, yeah

jusiur & rudy5, I agree mostly with your observations. unknown4x used it mostly for scalping

there's still some value in flows analysis for longer timeframe trades beyond scalping. cross analysis helps me to filter my trade ideas. for eg. if I m looking to short eurjpy, but eurusd does not confirm this, then euro is not really weak. yen is probably strong & pulling the cross. then I will look if there r potential trades on other yen crosses

Last time I looked into this stuff I stopped because the indexes looked so similar to the USD crosses I decided it wasn't worth the extra analysis