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An indicator for the strength of a currency

  • #41
  • Jun 23, 2019 8:57am Jun 23, 2019 8:57am
Quoting Rafei
{quote} Very good, that is why I am here too. {quote} This indicator is based on all pairs and it is better to trade and consider all pairs of a currency at the same time. As you can see in figures I have posted until now, you can benefit from increasing/decreasing of strength/weakness of a currency without considering strength / weakness of other currencies.
"it is better to trade and consider all pairs of a currency at the same time."

How long do you have it backtested? What are the results?
  • #42
  • Edited 9:41am Jun 23, 2019 9:30am | Edited 9:41am
Quoting Fred-IV
{quote} "it is better to trade and consider all pairs of a currency at the same time." How long do you have it backtested? What are the results?
I am trading a month using this indicator on an ecn-real account. It is proven to me that if we detect the strength or weakness of a currency correctly, then we are in profit. This can be proven using charts and calculating the price change from entry to the exit.
If I think that a currency is getting strong, as far as I don't know what other currencies may get strong too, it is better to trade all pairs of a currency to overcome losses.

The problem is that I don't have a general strategy for detecting the ups and downs of the currencies using indicator. Supports and resistances do not give me the correct direction.
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  • #43
  • Jun 23, 2019 9:49am Jun 23, 2019 9:49am
Quoting Rafei
{quote} I am trading a month using this indicator on an ecn-real account. It is proven to me that if we detect the strength or weakness of a currency correctly, then we are in profit. This can be proven using charts and calculating the price change from entry to the exit. If I think that a currency is getting strong, as far as I don't know what other currencies may get strong too, it is better to trade all pairs of a currency to overcome losses. The problem is that I don't have a general strategy for detecting the ups and downs of the currencies...
You have written something pretty serious, you cannot know this after a month of testing only, sorry. It is rather a belief, currently unsupported by data.

If I may suggest something, this indi might be a good point of start but now read the threads above, maybe this one too: https://www.forexfactory.com/showthread.php?t=545718 all devoted to different approaches to the strength of currencies

It will spare you much headaches and losses.

Good luck.
  • #44
  • Jun 23, 2019 9:55am Jun 23, 2019 9:55am
Quoting Fred-IV
{quote} You have written something pretty serious, you cannot know this after a month of testing only, sorry. It is rather a belief, currently unsupported by data. If I may suggest something, this indi might be a good point of start but now read the threads above, maybe this one too: https://www.forexfactory.com/showthread.php?t=545718 all devoted to different approaches to the strength of currencies It will spare you much headaches and losses. Good luck.
This one month is a forward test.
Anyone can look at the past 10 years and check if there is any contrary.
Thanks a lot for the link
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #45
  • Jun 23, 2019 10:08am Jun 23, 2019 10:08am
Quoting Rafei
{quote} This one month is a forward test. Anyone can look at the past 10 years and check if there is any contrary. Thanks a lot for the link
Anyone can, but we have not exact rules what to look at, so no one will.

Maybe you have no experience in trading boards and don't know how well prepared you should be to receive feedback from experienced users, at this moment this doesn't look good, so the expected result will be probably similar to hundreds before.

However I would like to wish you success, hopefully, we will talk again in the future, don't get discouraged.
  • #46
  • Jun 23, 2019 10:41am Jun 23, 2019 10:41am
Quoting Fred-IV
{quote} ... but we have not exact rules what to look at, so no one will ...
Thanks for your opinions.
I have done a test and calculate the sum of the all 8 signals for each bar. This sum is zero at all times. Does this mean anything to you?

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HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #47
  • Jun 23, 2019 10:54am Jun 23, 2019 10:54am
Quoting Rafei
{quote} Thanks for your opinions. I have done a test and calculate the sum of the all 8 signals for each bar. This sum is zero at all times. Does this mean anything to you? {image}
Yes, it might mean (if you consider this as a strength of currencies) that sum of all strengths of all currencies at any given time equals zero.

For me, it is nonsense, although you may try to change my mind.
  • #48
  • Jun 23, 2019 12:00pm Jun 23, 2019 12:00pm
The best way to use this kind of indicator is going back to the past and then check when the currencies made a top or bottom, and then mark the OB/OS lines on the indicator. Then when you have one currency on overbought and the other on oversold, you have higher odds of success, you can either short one or buy the other.
  • #49
  • Jun 23, 2019 12:16pm Jun 23, 2019 12:16pm
Quoting Fred-IV
{quote} Yes, it might mean (if you consider this as a strength of currencies) that sum of all strengths of all currencies at any given time equals zero. For me, it is nonsense, although you may try to change my mind.
I agree with you and this means something pretty serious

Sum of all changes is equal to zero at anytime, means to me that if one currency is getting weak, the other currencies (as a whole) are getting strong, and vise versa.

In other words, if we sell a currency, when it is getting weak, we will get profit for sure! But this profit is guaranteed if we trade all 7 pairs of that currency (not just some of them!).

By the way, I am not trying to convince you for something that you do not believe. I am trying to clear my statement about trading all pairs of a currency for all traders who might read this post.

Thanks for your comments
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #50
  • Jun 23, 2019 12:38pm Jun 23, 2019 12:38pm
Quoting Rafei
{quote} I agree with you and this means something pretty serious Sum of all changes is equal to zero at anytime, means to me that if one currency is getting weak, the other currencies (as a whole) are getting strong, and vise versa. In other words, if we sell a currency, when it is getting weak, we will get profit for sure! But this profit is guaranteed if we trade all 7 pairs of that currency (not just some of them!). By the way, I am not trying to convince you for something that you do not believe. I am trying to clear...
Err, no. It might have a chance to be true if you have pips, not percents because you might have positive percents and negative pips (almost convinced, too lazy to recalculate your formulas).

As I understand your system relies on the proper assessing the direction of the currency. It is the same almost as assessing the direction of the pair. So if you look at the chart and will see trend you might have positive outcome. I sense here that you complicated something simple, you observe your charts instead of for example currency index. If so this approach has no better edge than just looking at chart and assessing if we are under daily open or above.

But, there is spread so ... this is a slight problem also. So it might be no mathematical edge at all. But I might be wrong.

However, I encourage you to trade this way and market will verify you, sounds good will not work for me. But maybe for you, I will check in a quarter or two.
Thank you for this discussion, over and out.
  • #51
  • Edited 4:38pm Jun 23, 2019 4:17pm | Edited 4:38pm
Quoting Fred-IV
{quote} Err, no. It might have a chance to be true if you have pips, not percents because you might have positive percents and negative pips ...
Thanks to your comments, I have designed another test for clarifying obscure things. For this purpose, I have created a similar indicator in which the price change is calculated according to the open price of the day and the result is exactly the pips change which one currency gives at any time with respect to the open price of the day. The formula is as following:

for ( j = each pair of currency )

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


Please compare this formula with the one stated at the first post.

Here are some pictures of the two indicators:

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I see that price change percentage is a bit different from real pips change, but signals are very similar. We can find supports and resistances in both indicators!

Please note that both indicators cross zero level (approximately) at the same time!

Does this prove the statement of "trading all pairs of a currency at the same time"?

About spread and commission, I would say that for a real ecn account (which I have tested), at the worst case (which is trading GBP pairs), the spreads and commission are summed up to 15 pips. But, please note that spreads and commissions are the costs of any trade not just this kind of trading! You trade 7 pairs of a currency and you give spreads and commission too.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #52
  • Jun 23, 2019 5:13pm Jun 23, 2019 5:13pm
Why don't you change the formula to display something like a RSI or the COT index? It is way better to see when the currencies are at extremes and ready to turn... Add an input in indicator options like "lookback period" so we can play with different values.
  • #53
  • Jun 23, 2019 5:26pm Jun 23, 2019 5:26pm
Quoting Gauer
Why don't you change the formula ...
Good idea, I am thinking about that. I will post the new indicator here.

Thank you very much.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #54
  • Jun 23, 2019 9:52pm Jun 23, 2019 9:52pm
Do not believe the indicator can handle a broker with a suffix -- ie: EURUSDi
Post the source code and I will modify.
  • #55
  • Jun 23, 2019 9:59pm Jun 23, 2019 9:59pm
I have put it in good use -

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  • #56
  • Jun 23, 2019 10:21pm Jun 23, 2019 10:21pm
The MDASH couple with TMA Slope have a better edge,


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  • #57
  • Jun 24, 2019 2:06am Jun 24, 2019 2:06am
Quoting Ryder
Do not believe the indicator can handle a broker with a suffix -- ie: EURUSDi Post the source code and I will modify.
You can go to the properties of the indicator and change the symbols so that match your broker.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #58
  • Jun 24, 2019 2:17am Jun 24, 2019 2:17am
Quoting mixedbags
I have put it in good use - {image}
How do you use the indicator? would you please describe more?
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
  • #59
  • Jun 24, 2019 3:24am Jun 24, 2019 3:24am
Quoting Rafei
{quote} Thanks to your comments, I have designed another test for clarifying obscure things. For this purpose, I have created a similar indicator in which the price change is calculated according to the open price of the day and the result is exactly the pips change which one currency gives at any time with respect to the open price of the day. The formula is as following: for ( j = each pair of currency ) currency = currency + ( iClose( Pair[j] , Period() , i ) - iOpen( Pair[j] , PERIOD_D1 , dayCount ) ); Please compare this formula with...

Hi, a couple of further remarks.

I am convinced that your system/approach is flawed, this second - "pips indicator" approach, sheds new light to your ideas - I mean I have an impression that you assume that total pips in plus and in minus since open of every pair is ... zero! This is nonsense.

It seems to me that you have defined your indicator as having a feature that at any point its sum equals zero and then you are suddenly surprised that it .. equals zero. From this, you are reaching the far conclusion (imho) that trading a basket of pairs gives you an edge and you will be in plus.

Err, no. Still market may reverse at any time, so you lack something here - some additional rules increasing the probability of a positive outcome. I mean your theory (in fact this is not a theory but an assumption coming from a misunderstood indicator - in my opinion) not backed by logic or data test is too weak to provide a positive outcome.

But, don't listen to me. Trade it, I might be wrong. If I am not wrong - you will have a direction where to search for possible flaws.

1. The way I see how your indi works on the market - it identifies buyouts and selloffs - which might give us an idea about the general direction of the market.

2. This coupled with week indi may give us an idea about the general direction of the market in this day and this week. Is the currency bought or sold -I mean you can assess the general trend of the currency (something like this we can see I suppose from the currency index).

3. This, paired with any other system can give a trader a certain edge over the market - you can take signals in the general direction of a weekly/daily trend of a currency, not a pair (this is important).

4. Maybe it will give something more - playing with this indi may uncover some cool features too, like support and resistance and how it translates to market behaviour.

Thats why I encourage you to study it further.
  • #60
  • Jun 24, 2019 4:03am Jun 24, 2019 4:03am
Quoting Fred-IV
{quote} Hi, a couple of further remarks. ...
Hi,

I really thank you for your attention and your time. In this challenge I created a new indicator which is directly related to the pips change in a day for each currency which, I think, is more reliable than change percentage.

I also agree with your analysis using this indicator. You summed up the usage more better than me.

Thanks a lot

I am thinking about some other things too. Please follow us.
HE WHO STRONGLY DESIRES TO RISE UP WILL THINK OF A WAY TO BUILD A LADDER.
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