(binned per thread starter’s Request) World Currency Unit (WCU) -

Hello, World!

This is a slightly modified version of Neilsdigest's original WCU strategy: https://www.forexfactory.com/thread/748112-binned-per-thread-starters-request-world-currency-unit

Yes, this is trying to pick top/bottom and you may say this is silly. However, I still find some value in this simple strategy. I don't actively trade forex anymore. This is a very simple hobby trading which requires near zero time spending.

Make it simple. I tried nearly everything under the sun including harmonic patterns, murrey math, elliott waves, grid systems, currency strength meters, weekly/monthly pivot, supply/demand, retailers sentiment index, bond yields ... etc to improve it and minimize the risk but it didn't work. So, you may not want to repeat my mistakes by attempting to add other things to this.

Because I use higher time frame, I don't find many trading opportunities. As a result, you may feel this is quite boring. Yes, this is obviously NOT a 'becoming a rich quick' strategy. To make living using this strategy, you should be already rich.

I expect some DD (and sometimes it can be a significant DD), and I don't add up extra positions to either winners or losers. This is a single entry/exit, easy going strategy. That being said, you need to use very low leverage, actually lower the better.

Regarding the stop loss, it's up to you. You need to cut losses when you start feeling uncomfortable. For me, probably 10%? First, cut the loss to save your ammunition, then watch carefully for reentry opportunity at better price. The better reentry opportunity will come for sure because eventually, the market is also controlled by law of gravity. You will see more over-stretched in WCU chart, more powerful and violent counter move happens.

This is my Tradingview template. You need to use free version of Tradingview. WCU is not available for MT4/5.

https://www.tradingview.com/chart/U60YKnho/

This thread will be undated slowly when I find time for update. Stay tuned.

How to copy Tradingview template:

https://youtu.be/sWqODEngE48

My TE was actually opened several years ago and I had blown this up trying and mixing several strategies. For 100% transparency, I post the full TE history below:

Howard Marks Says Investors Should Try to Catch Falling Knives

https://www.forexfactory.com/thread/post/11880909#post11880909

World Currency Unit (WCU)

http://wcu.ln.edu.hk/en/
https://en.wikipedia.org/wiki/World_currency_unit

The World Currency Unit (WCU)，or alternatively and perhaps more accurately, the “Global Purchasing Power Unit”(GPU), is an indexed unit of account that stands for a unit of real global purchasing power. Proposed by Lok Sang Ho (http://www.ln.edu.hk/econ/staff/cvlsho.htm), of Lingnan University, Hong Kong, it was first intended to be the basis for denominating global bonds, a debt instrument that is issued globally and subscribable by people and institutions around the world. Since each unit by design represents a unit of real purchasing power, using the WCU to denominate bonds improves the transparency of real interest rates, as the stipulated interest rate on WCU-denominated bonds already represents a real interest rate. In principle, the common denomination of bonds by issuers from different parts of the world using the WCU will produce more efficient capital markets, as savers and borrowers around the world converge in their understanding of what each basis point of interest means.
Irving Fisher in his 1911 book The Purchasing Power of Money had advised that the purchasing power of money should be stable if it is to serve as a unit of account, a trusted medium of exchange, and a reliable store of value. Unfortunately, substances that exist by the bounty of nature, such as gold or silver, cannot have such property since their values fluctuate with changing supply and demand. This is the motivation behind all indexed units of account, of which Robert Shiller of Yale University is a principal proponent.
To be meaningful as a unit of standard real global purchasing power, a WCU will have to represent a basket of global output. According to the initial proposal by Ho, the WCU(0) is a basket of the gross domestic products of key market economies in the world in base year 0, namely the USA, the Eurozone and UK, Japan, Canada, and Australia. Addition of these GDPs, each in its own currency, is done by converting all GDPs into US dollar values in the base year.
When the WCU was first designed, the sum of these GDPs are scaled down to equal $100 in the base year. The scaling factor λ then becomes part of the definition of the WCU, as it defines the size of the GDP basket. Thus a WCU series must be specific with respect to an output basket for a specified year.
As of 2009, we have redefined the size of the WCU and have changed the base year from 2000 to 2005. In principle, for any extended period, sticking to a fixed output basket would be misleading, since production as well as consumption patterns will change, as will the relative importance of economies. One innovation that we have introduced is to update the GDP weights every year. It should be noted that although the GDP weights are allowed to vary from year to year, we DO NOT CHANGE THE BASE YEAR. under the new methodology. Although the weights do change, all currencies are indexed against inflation since a common base year, and we can still say that we maintain the purchasing power as defined in the base year. It has been proven that the WCU is equivalent to a standardized basket of currencies each indexed against inflation since the base year. The standardized basket of currencies, as well as the WCU2005, is defined to be worth US$1 in 2005.
We have not yet changed the time series presented in the historical graph from 1970, which was derived with "rebasing" every five years, and which generally continues to portray the general movement of the nominal value of the WCU since 1970
For more details about our new methodology please visit our Daily Quotations page. On each business day we will announce the updated valuation of the WCU2005 in each listed currency as well as how many units of the listed currencies a WCU2005 unit will buy.

I watch Daily, Weekly, and sometimes Monthly. I am currently interested in CHF, JPY and CAD:



Especially as USDCHF long position has a positive swap, you can hold this forever!

I give out this strategy because this is a hobby project. I run a small shop for living and trading is a part time job to me. I mostly day trade natural gas futures (/NG). I love natural gas so much. I am done with forex and WCU is the only one I have currently for forex.

who says picking up tops/bottoms is silly?

I think this strategy is better than Davit's pivot factory (https://www.forexfactory.com/thread/588764-pivot-trading). When Davit suffered deep DD or even blew his account, WCU didn't give entry signals. Or, if you wish you may try to mix two strategies seeking improvement.......

Paul Tudor Jones said.....

No, definitely not silly my friend if you have a complete strategy....

My trading buddies ask me why I am a counter trend trader and my answer is:
'Well if you think about it, I take the turn and ride the whole new trend that all you "trend traders" try to find,
it is just that I get in a little earlier than you", now this is easier said than done, took me over 5 years to
find an ideal way to do it, and when it does not work, you better have money management skills.

I noticed some "counter trend traders" just take a trade and if it goes against them they just add, this plan
has high returns till sooner or later this stops working, there will be a "JPY" runner that will kill the account, that is gambling.

But it is the ideal way to trade for me, so I will follow with interest!
(and Paul Tudor Jones is 100% correct )

When you zoom in/out my TV template, the top/bottom of the currencies changes. For example:


When zoomed in, JPY is in oversold condition. However, when zoomed out, it still has enough room to go down. I like to zoom out enough for slow trading with reduced risk. Or, I can watch weekly chart instead. In my opinion, Daily signal is weak. I prefer Weekly chart based trading.
As you can see, CAD and CHF are all overbought condition in the second chart, and therefore I am selling them.

I stopped reading news feed such as forexlive.com. Instead, I watch free Bloomberg live TV. I'd like to see not many headline news of the currency I like to trade before I pull the trigger. For example, when I trade CAD, I don't want see CAD is being spotlighted in the news. When people no longer pay attention to it, that's the right time to try to pick top/bottom.

It's really not scientific but if you still don't have any winning strategy and if you are sick of being hunted continuously by big algo players, why don't you try? At least, it really requires nearly zero time spending......

Neilsdigest originally pioneered this idea. He insists he was a former trader of Barclays. Can it be true? Who cares... Personally I want to believe he was. Anyway, I really appreciate him for publicly sharing this idea to FF.

The caveat should be ingrained, soldered, nailed twice. Know when it's time to go, is a defacto must.

One of the noticeable drawbacks of this strategy is swap cost. As swap is viewed by brokers as an additional source of income, they usually overcharge swap cost. As you can see from my current CADJPY trading, swap can easily eat out your profit. So, when your position has a negative swap and you want to hold it for an extended period of time, you may want to monitor your swap cost as well.

Wow, I thought swaps were fixed, based on interest rates. Brokers are defo not your pals lol

here is full with "profesional" traders who do know the next 30-40 pips, with 110% certainty, but somehow almost always counter trend trading!?! and yet, they cant nail the trend and pocket 300 pips instead?!? hello?

the only way i do know of making profits is by HOLDING for longer times/pips. then, swaps are just like a joke. the brokers do know that. and this is their honest way of having a piece of the profit of the really profitable traders. i find this to be fair for both sides.

pay the counter and move on. both sides are happy.

Reentered USDCHF long after it had some pull-back......

Although not as strong as CHF or CAD, GBP also looks nice to short...... As far as I know Pound is not much highlighted on the news except Boris the jerk at this time.