Next Day Currency Index

A directional forecast that predicts whether a currency will strengthen or weaken over the next trading day.

Disclaimer: This is not financial advice. All content I post in this thread is my personal analysis and trading plan, shared for educational and discussion purposes only. Forex trading carries substantial risk of loss and is not suitable for all investors. Past performance and forecasts do not guarantee future results. Do your own research and consult a licensed financial advisor before making any trading decisions. I may or may not take the trades described. Personal analysis only, trade at your own risk.

CAD projected to strengthen against CHF, GBP, and USD.

Backtest: Friday, May 8. USD projected to weaken against GBP, EUR, and JPY.

Backtest: Thursday, May 7. USD projected to strengthen against EUR, JPY, and NZD.

Backtest: Wednesday, May 6. JPY projected to strengthen against CHF, EUR, and USD.

Backtest: Tuesday, May 5. AUD projected to strengthen against CHF, JPY, and USD.

Backtest: Monday, May 4. CHF projected to weaken against AUD, CAD, and GBP.

Results so far look promising. I think that's enough backtesting. Worth moving to forward testing this week to see how it holds up.

Mondays might not work well since they're prone to weekend gaps. This doesn't necessarily invalidate the projection for pairs that gapped in the predicted direction. For example, GBPCAD was projected to print a red candle, and it did gap down around 200 pips. Directionally it was correct (the Friday close to Monday open "weekend candle" was red as projected). The move just happened while the market was closed, so it wasn't tradeable from Monday's open. The projection validates, even if Monday isn't a reliable execution day on the pairs that gap over the weekend. So far, so good. Forward testing continues.

Backtest: Friday, May 1. USD projected to strengthen against EUR, GBP, and JPY.

Backtest: Friday, May 1. JPY projected to weaken against EUR, GBP, and USD.

There were two currency indexes for Friday, May 1.

Backtest: Thursday, April 30. NZD projected to strengthen against AUD, CHF, and GBP.

No currency index reading for Tuesday, May 12. A bit odd, but likely a one-off. There should be a reading for Wednesday.

How do you select the pairs? Seems like discretionary process instead of systematic process.

The approach is fully systematic, with no discretionary input whatsoever. Any discretion would invalidate the testing entirely, so I'm sticking to rigorous backtesting

Wednesday, May 13. First forward test. GBP projected to strengthen against CAD, JPY, and NZD. I also plan to trade additional correlated pairs alongside the basket: GBPAUD and GBPUSD. Note: only GBPCAD, GBPJPY, and GBPNZD were directly projected by the currency index. The other pairs (GBPAUD, GBPUSD) are added based on their high correlation to the projected pairs through the shared GBP leg. They weren't part of what the index specifically called, so only GBPCAD, GBPJPY, and GBPNZD should count toward evaluating the model's accuracy.

very interesting . do u use any indicator to use strength or just seeing candlistics and movement to find strength or weak?

Thanks

The pairs are identified by an indicator. You said "interesting," which made me wonder, is that because it agrees with your technical analysis on GBP for today?