(binned per thread starter's request) Currency Strength with cont

Pips galore. Had my euraud and eurnzd trades open, also snuck in an audnzd.

Perhaps I wasn’t wrong about gbpaud and gbpnzd afterall. Tiny bit of news manipulation to drive the market where they want

GBP shorts next?

Edit: do not use Oanda. They’re Assholes. Closed out winning trades for absolutely no reason. I stopped using IG because of this.

I love doubters, never mind 100% we give it 226%!

Edit: I put my analysis here but didn't crop properly. Perhaps I'll update later...

Is there a way you make your indicator available for mt5?

Check GlobalPrime - they are located in Aus, been using them on demo account now for 2 years and never had a day's problem.

Unfortunately never developed anything on the mt5 platform...

I was thinking of using IC Markets as they’re ECN and have incredibly low fixed spreads.

Neil also recommended ADSS on here before.

I need a broker that has a platform for scaling out. Not only to Oanda close me out when I’m in profit but they don’t allow me to scale either.

Consider Fxpig.
Yesterday I was in several short positions on EURJPY and EURCHF as per contrarian methodology. FXCM I have also account with gave me requotes 5 or 6 times when I was closing profitable trades, fxpig surprisingly did not give single requote.They offer free FIX Api and up to 1:400 leverage even for EU traders due to be under obscure Vanuatu regulation though

... Like really? Probably another Neil's joke towards his stalker...

Hi Neo,

I use ICMarkets and haven't had any issues so far. As you said, they have low spread and they're ECN. The commission is $7 per lot.

ICmarkets is one of the best except they can't take on U.S Clients.

It has Interbank liquidity from 50 different sources. They process over fifteen Billion dollars in forex trades daily. As its an ECN broker they don't trade against you..
Liquidy providers include J.P Morgan.. Bank of America... Morgan Stanley... HSBC etc.

It is regulated by the top-tier Australian regulator, the Australian Securities and Investments Commission (ASIC)

P.S What a week that was. Who can deny it doesnt work. Just keep on loving that JPY and retail traders ;-)

Have a great weekend and see you soon....

Again, all thanks to you grand master haha

Yeah, gotta love JPY. Take care and have a great weekend guys

I've had quite good trades on EUR crosses this week.

That means the stalker will never get my apology

I am also a client of IC markets and no complaints here

Honestly, I intend to leave, but I felt it would be irresponsible not to post some final words of caution. I hope that these come across as being realistic rather than negative. And please always remember that I'm a programmer, not a professional trader, hence take my comments with a grain of salt.

1. To recap: my research tells me that, viewed collectively, retail traders trade countertrend, i.e. they attempt to "buy low, sell high" by picking tops and bottoms. Then if the market trends further away, they tend to hold onto their losing positions, and some even add to them. (Read the PDF attached to this post https://www.forexfactory.com/showthread.php?t=930086 for a fuller explanation, and more examples). The myfxbook data shows that the vast majority of retail trader positions are under water at any given point. Further, we know that institutions and bucket shop brokers profit by trading against their clients. That's largely because prices tend to form a 'fat tail distribution', hence trading with the trend, i.e. against the retail herd, offers a small edge.

However, in many respects, institutions and brokers are in a much better position to exploit a small edge than the average 'contrarian' trader. They have hundreds of clients, and the capital that's needed to take hundreds of (quasi)independent concurrent positions with different entry levels, using diversification and the law of large numbers to mitigate risk and smooth their income (casinos do likewise by running multiple gaming tables simultaneously, offering hundreds of games of blackjack, roulette, etc per hour).

2. I've just built a new dashboard facility into my software, and run comparisons with a strength indicator (PSA). PSA is the only strength meter than I'm aware of, that can calculate, and weight, strength values over multiple timeframes and periods, and then output a single consolidated result, at both pair (instrument) and currency levels. This makes it suitable for direct comparison against retail trader volumes, as traders operate across different timeframes, i.e. scalpers through position traders.

In my opinion, the results (see the end of this post**) are eye-popping. The (inverse) correlation between retail volumes, and both pair and currency strength, is virtually exact. This tells me that retail volumes are no more a leading indicator than a strength meter that gains its values from a study of historical price; they are merely a confirming indicator, and offer little more than a simple TA/PA based trend following strategy. I believe that all amateur trading strategies are little better than a 50/50 proposition; the key is in somehow maximizing gains when conditions are favorable, and staying out of the market, or otherwise managing trades prudently to contain loss, when they're not.

3. There's nothing magical about RSI. It is merely an oscillator that's derived from price. I provided a link to the formula back in post# 2,357. I don't fully understand how it's being used by others here, but 2 period RSI is going to be exceptionally responsive to price movement in the designated timeframe. A sharp move upward to a high RSI value simply means that price has moved sharply upward, or broken out of some kind of a range. Anyway, whatever the strategy entails, indicators that are derived from price must necessarily follow price, and there is little that you can glean from an indicator that you can't get by simply studying price.

4. Last week was fantastic for trend traders, with weakness in the antipodeans (NZD, AUD), and also continued weakness with GBP augmenting safe-haven flows to JPY. The Trump tweets late in the week (China is one of Australia's key export markets, impacting AUD) fuelled this even further. This type of week is not necessarily typical!

5. Some words of warning about EAs, as recently there has been talk of one being shared here. All EAs have limitations in that they can't make intelligent or nuanced decisions, understand or act on fundamental data, or adapt to changing, extraordinary, or unexpected market conditions. Also, an EA is only ever as reliable as the quality of its code; one small bug can cause unpredictable results. More detailed thoughts about EAs here: https://www.forexfactory.com/showthread.php?t=657018

If an EA is being given away, then obviously there's nothing to lose by experimenting with it on a demo account. However, if an EA is being sold, I won't be buying it, as I believe that, like most other strategies, contrarian trading ultimately necessitates an understanding of market fundamentals, and some nuanced decision making (see some of the comments by Neil, Neo and others earlier in this thread). Caveat emptor!

Of course I'd be delighted to be proved wrong; a mechanical 'holy grail' system would benefit me just as much as anybody else.
Anyway, it goes without saying that I wish you all every success.

My parting words for this thread,
David

Sorry, I forgot to mention that if you want the (free) software, it can be downloaded here: https://www.forexfactory.com/showthread.php?t=930086

Thanks for your kind comments. I will leave until my fascination with FX lures me back, lol.

Thanks for all of your kind comments.
Here is a screenshot of my PSA settings. I've weighted more heavily toward the shorter TFs, as I assume most of the 'herd' traders operate intraday.

There is no optimization, they were arbitrarily chosen as the first values that I thought of, that I figured might be suitable for the purpose of this comparison.
_____________________

** Here are the results of the 'Dashboard vs PSA' comparison (material has been copied unedited from the PDF):

Release 1.31 now allows a Dashboard to be plotted in MT4 (see screenshot below, and more information in the 'Modifications history' section at the foot of this document). The PSA indicator (more info here (http://www.forexfactory.com/showthread.php?t=513671)) is the only strength indicator I'm aware of that's capable of calculating a consolidated strength value across multiple timeframes and periods. Since retail traders consist of everybody from scalpers up to position traders, I decided to run a comparison between PSA and Retail volumes. I've included the PSA in the latest zip file, and also the 'PSA comparison.tpl' template used to create the screenshot, so that you can play with the settings, and run the software to draw your own conclusions.

The screenshot further confirms how closely retail volumes are the inverse of currency strength. I assume that the majority of retailers trade intraday, and the PSA has been weighted accordingly. Note how the rank of the currencies (e.g. –5 means a currency whose net volume is lower, i.e. more negative or more highly sold, than 5 out of the other 7 currencies). Note how (if we reverse the USD and CAD, which are ranked third and fourth) that this is the exact inverse of the PSA currency strength rankings! Also that retail's 3 most heavily shorted pairs (EURGBP, EURAUD and EURNZD) are the only 3 showing a positive (green) PSA rating; while retail's only other pair with a %Short > 50 (USDCAD) has the least negative PSA value (-44). One slight anomaly is that only 24% of retailers are currently short GBPJPY, while is ranked as second weakest by PSA. However, GBP and JPY are the highest and lowest ranked currencies on the Dashboard.

There is undoubtedly a fantastic degree of correlation here. To whatever extent 'contrarian' trading can be made to work profitably, then I believe that this further demonstrates that simply trading in the direction of strength, by pairing the strongest currencies against the weakest, can potentially deliver an equivalent result, i.e. profitable to the extent price trends far enough, and less so (and possibly even a losing strategy, if entries are too late, but it depending on how positions are managed) on the occasions when these trends peter out. Hence the devil is in the detail, in terms of how accurately traders are able to time their entries and manage their trades.

Hanover, yourself and Neil aren’t going anywhere.

Our brethren, this bond cannot be broken.

Starts playing ‘I’ve got the brains, you’ve got the looks..... let’s make lots of moneeeey’

Edit: Hanover, thank you for your contributions. Aside from this being an interest for yourself, you’ve displayed selflessness in helping others. You deserve the best.

Also, would anyone know where I can get a decent paid for linebreak indi for MT4? Keen to test.

This one could work

https://www.mql5.com/en/market/product/25607#description

Greatly appreciate the work you do hanover. I also came to a similar conclusion after experimenting with another currency strength indicator. But you are right, the correlation is almost perfect. Of course, everyone must try it and test it themselves.

Trading forex is statistical game rather than trying to predict where the market moves next. What you've wrote is the key (one of). Employ any strategy having more then 50/50 (the more in trader's favour the better of course), introduce proper risk and money management, cut losses reasonably quickly, let profits run, introduce proper exit strategy and that's it. Sounds easy, but building it needs a lot of effort and experience. That being said it's not a rocket science it's actually quite boring and cumbersome process.
Retail position statistic is nothing more than an attribute or part of trading system. Contrarian trading is not a system per se, it must be complemented with further things. I mean, monitoring just myfxbook outlook and rsi is not enough. Trading it this way would be rather gambling. I was under impression it's quite clear fact so I have not particularly expressed that before. Perhaps I should have shouted more loudly because people like Stimpy the stalker do not do their homework and waiting when someone else do the job and will share the full strategy with them. Let me add here Stimpy the stalker, hiding yourself after pronouns like us and our, and using we denotes lack of self confidence and can be also sign of some serious mental disorder . And btw I expressed almost exact the same thing you are blame me about in the private message the other day.

Unfortunately the myfxbook outlook history data are quite restricted, so it's impossible to do back test properly. For that fact I've been doing forward tests for couple of weeks now with some tweaks here and there as time progressing.

WOW some good stuff here. if you give me the weekend off I will update you all on something better the the RSI.... If you use the indicator coded by erm, sorry was it frostypips.. It works and works well but mainly it tells you the trend..

The strategy I use with the SSI is the long term approach. Keeping in the trend even (sometimes) through the pullbacks, countertrends etc.

Some will find this not to their liking.

I had a 90% success last week - Yes the markets are trending and trending our way and not the retail way. Its not always like this as you know pairs/currencies only trend 20% of the time.

Hanover I was going to say it's summer. Go enjoy it but realized you are in the southern hemisphere so its winter ;-). Not sure what the weather is like but it bloody hot here.

P.S The line break chart that was posted a few posts back is the one I use on MT4.. As said before DO NOT use line break charts on tradingview as they only update depending on what timeframe you use... As I use the daily chart to make the line break charts on setting 1, tradingview will only update the chart on a daily basis.

Thats why I love you guys.....
I also came to a similar conclusion after experimenting.
For that fact I've been doing forward tests for couple of weeks now with some tweaks here.
Last week was fantastic for trend traders, with weakness in the antipodeans (NZD, AUD), and also continued weakness with GBP.

Keep it going. Research pays off.

Trends only happen around 20% of the time. This year so far has been one of the best years yet for this method. Trump is a genius if you look at it this way. Brexit has been the most awesome money making experience yet... The U.S stock market and the JPY.. In times of crisis it is negatively correlated.. If the U.S markets drop big , it goes into the JPY. As we seen after Trumps tweet. The markets dropped big for two days and the JPY rose for two days.

Take an idea. Make it better. See what works with the SSI data and what doesnt. etc, etc. Find you own approach.. Day trade, swing trade etc, etc.

But as I have said all through this thread from the very beginning when Osjoes2 made the thread for me... Nothing will ever be sold. NEVER. I don't need the money by selling some EA or indicator.

Any way thanks guys and keep on researching.

P.S I can't say much now as the FCA reads this thread ;-)