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Individual Currencies & Relative Strength

  • #61
  • Oct 4, 2008 8:20pm Oct 4, 2008 8:20pm
Quoting smjones
I have made a lot of money by picking a strong currency and trading it against a weak currency.
That's encouraging. I haven't made a lot of money, but it's right at the top of my to do list for next week!
  • #62
  • Oct 4, 2008 11:05pm Oct 4, 2008 11:05pm
FXSurfer...pipsqeak4X...tdion...capitalist88...smjones...euclid

Now we're getting somewhere; this exchange of ideas is exactly what I was looking for. And Scott, you're comments reinforce my belief that there is "trading power" in identifying both the weak and the strong. Next stop is for me to check out your posted link. And then a visit to capitalist88's website.

Well done mates !!!
  • #63
  • Oct 4, 2008 11:08pm Oct 4, 2008 11:08pm
Quoting euclid
I don't want to sidetrack this thread too much with my particular charts, which are not available in the public domain. I'll probably start a journal and discuss it in that.
euclid......................go ahead post it here. I started this thread for just this type of discussion; please feel free to add your pertinent thoughts AND charts.
  • #64
  • Oct 5, 2008 1:51am Oct 5, 2008 1:51am
Signing up. Isn't this idea a basis for Trader101's thread?

Lenoxer
  • #65
  • Oct 5, 2008 2:45am Oct 5, 2008 2:45am
Dear Thread,

Check out post #1742 on the following link:
http://www.forexfactory.com/showthre...07119&page=117

Perhaps this is a tool for judging relative currency strength and putting on trades. Hope this is somewhat of a contribution.

My best to all,

Lenoxer
  • #66
  • Oct 5, 2008 5:38am Oct 5, 2008 5:38am
Here's what Friday's map was showing me for trading the eur/usd, eur/jpy,and usd/jpy. First off the map is designed to show which way to trade by color and the darker the color the trend is stronger. I like to trade when both pair example eur and usd are strong colors and also can turn the 5 time frames for each to that color. Then trade the pair in this case eur/usd in that direction. Also I like to use the 4320 time frame color to only trade in that direction.

Friday there were 3 nice shorts both on eur/usd and eur/jpy at about the same times can you find them? I didn't make any trade on usd/jpy for two reasons. For most of the time jpy and usd were not same color together and the 4320 was light in color and not constant. This is not very hard to do unless your color blind... Hope everyone has a great trading week.

Attachment is bmp should open in windows viewer....
Attached File(s)
File Type: zip Friday 10-3-08.zip   92 KB | 1,355 downloads
  • #67
  • Oct 5, 2008 9:41am Oct 5, 2008 9:41am
I added a bands indicator to a 5m and 1 hr eurusd chart with settings you recommended. When I added the pricetruemovement indicator, I changed the default settings from USD to: EUR, EURGPY,EURGPY,EURJPY,EURCHF, and EURAUD. Also, I checked fixed min./max boxes to keep the indicators from jumping all over when looking back in time.

The signals are not consistent, for example, sometimes the PTM indicator moves below the bands indicator before trends down, but sometimes it moves above before trends up. So, I'm sure I'm doing something incorrectly. Would you post examples of 5m and 1hr eurusd charts with your set-up?

I think this method is excellent!

Quoting smjones
I do http://www.forexfactory.com/showpost...&postcount=466

I do not worry much about the actual chart numbers. I could normalize them the way you have done, but it is the movement that concerns me. Here is the MQ4 and anyone is welcome to build on it or change it entirely if they wish. Also included is the Template. I have made a lot of money by picking a strong currency and trading it against a weak currency.

You can also put an envelope on it and adjust the dev. I use.10 on 5 min and about .2 on 1hour. When the price jumps out of either boundary it can mean a strengthening or weakening of that currency based on whether it jumps the lower or the upper. I have just kept the envelope at 14 simple first indicator on each.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd_5m_pricetruemovement.gif Size: 21 KB
Click to Enlarge Name: eurusd_1hr_pricetruemovement.gif Size: 23 KB
  • #68
  • Oct 5, 2008 9:55am Oct 5, 2008 9:55am
Welcome to the discussion Lenoxer.......

It appears the Trader101 thread is similar in approach to what we are discussing here, but perhaps a little more complicated then what I had in mind when I started this thread. Personally I will need to spend some time reading before deciding. Thanks for the post!

Quoting Lenoxer
Signing up. Isn't this idea a basis for Trader101's thread?

Lenoxer
  • #69
  • Oct 5, 2008 9:57am Oct 5, 2008 9:57am
After checking this out, I will be using this method on a demo account this week. Thanks for the post Scott!

Quoting smjones
I do http://www.forexfactory.com/showpost...&postcount=466

I do not worry much about the actual chart numbers. I could normalize them the way you have done, but it is the movement that concerns me. Here is the MQ4 and anyone is welcome to build on it or change it entirely if they wish. Also included is the Template. I have made a lot of money by picking a strong currency and trading it against a weak currency.

You can also put an envelope on it and adjust the dev. I use.10 on 5 min and about .2 on 1hour. When the price jumps out of either boundary it can mean a strengthening or weakening of that currency based on whether it jumps the lower or the upper. I have just kept the envelope at 14 simple first indicator on each.
  • #70
  • Oct 5, 2008 12:17pm Oct 5, 2008 12:17pm
Something I've always wanted to do (but lack the programming skills for) is to set up 3d charting. 3d charting? But how do you do that?

The idea is that you introduce a 3rd axis to charting, open interest or orders, and specifically the notational volume thereof. Granted this would only work on a platform like an ECN where you can see open interest, though I bet you could get it to work on OandA's platform as well. This would also work well on the CME futures.

The best analogy I can think of is to a spectrograph, where it can move erratically in unison with the metered stream.

In my head it's like looking at the landscape of a vista, able to see everything in front of you. How useful would it be? Not sure, but I obviously thought of it for a reason, lol.

Then, take the 3d charts and you can compare them against other currency pairs to get a better view of relative strength per individual currency in a tripod configuration. GBP/USD, USD/JPY and GBP/JPY for instance.
Attached Image (click to enlarge)
Click to Enlarge Name: 3dcharting.PNG Size: 10 KB
Never underestimate the powers of the Force.
  • #71
  • Oct 5, 2008 3:03pm Oct 5, 2008 3:03pm
....is where your proper thinking is going! Along this line is where the next generation of analysis is going to occur, which will include harmonics and possibly put it's toe into the waters of intuition. But, a more artistic approach to this science will be required as we evolve in this realm of measuring mass market sentiment and timelines of reactions to questionable displays of data with very limited transparency.

Good post. But you won't get it with MT4. It is a system designed for brokers. That is why there will be such large gaps in the design issues of the creative trader. Yes, MT4 is a good tool for the average new trader, but it is not rich enough to handle the approach you have arrived at.

May your views continue to blossom..........
  • #72
  • Oct 5, 2008 3:08pm Oct 5, 2008 3:08pm
Quoting Forexharry
Here's what Friday's map was showing me for trading the eur/usd, eur/jpy,and usd/jpy.

Thanks for sharing it!

Friday there were 3 nice shorts both on eur/usd and eur/jpy at about the same times can you find them?

3:30 (lesser of the three), 9:00 and 16:00?

Hope everyone has a great trading week.

Same to you!
...
  • #73
  • Oct 5, 2008 3:13pm Oct 5, 2008 3:13pm
Quoting eagle4x
The signals are not consistent, for example, sometimes the PTM indicator moves below the bands indicator before trends down, but sometimes it moves above before trends up. So, I'm sure I'm doing something incorrectly.
Maybe it's correctly giving leading divergence signals?

Good trading Eagle!
  • #74
  • Edited 7:31pm Oct 5, 2008 4:03pm | Edited 7:31pm
Quoting eagle4x
I added a bands indicator to a 5m and 1 hr eurusd chart with settings you recommended. When I added the pricetruemovement indicator, I changed the default settings from USD to: EUR, EURGPY,EURGPY,EURJPY,EURCHF, and EURAUD. Also, I checked fixed min./max boxes to keep the indicators from jumping all over when looking back in time.

The signals are not consistent, for example, sometimes the PTM indicator moves below the bands indicator before trends down, but sometimes it moves above before trends up. So, I'm sure I'm doing something incorrectly. Would you post examples of 5m and 1hr eurusd charts with your set-up?

I think this method is excellent!
Interesting. However, you are doing something that I never did. I only use the full set to trade a strong against a weak. I do not use any of them as a prediction devise. No one can know where the market will go. So, I have no response to this. If you decided to change it, then that is your choice, but I cannot comment on your findings.

I am sure I said in my post above, I am not concerned with the actual chart numbers. I use the movement to trade a strong against a weak.

BTW I did not suggest using Bands, I am useing envelopes. However, the bands looks interesting.
Attached Image (click to enlarge)
Click to Enlarge Name: tpm eu.gif Size: 17 KB
  • #75
  • Oct 5, 2008 4:16pm Oct 5, 2008 4:16pm
Quoting The Jedi
Something I've always wanted to do (but lack the programming skills for) is to set up 3d charting. 3d charting? But how do you do that?

The idea is that you introduce a 3rd axis to charting, open interest or orders, and specifically the notational volume thereof. Granted this would only work on a platform like an ECN where you can see open interest, though I bet you could get it to work on OandA's platform as well. This would also work well on the CME futures.

The best analogy I can think of is to a spectrograph, where it can move erratically in unison with the metered stream.

In my head it's like looking at the landscape of a vista, able to see everything in front of you. How useful would it be? Not sure, but I obviously thought of it for a reason, lol.

Then, take the 3d charts and you can compare them against other currency pairs to get a better view of relative strength per individual currency in a tripod configuration. GBP/USD, USD/JPY and GBP/JPY for instance.
Hi guys, hope you don't mind me throwing in my 2 cents worth.

There is a program that factors in volume, price and time. J-Chart. I've used it before and I never cease to be amazed by the uncanny precisions of its S/R points. Basically it records how much volume is traded at a certain price and it marks it, the more volume traded, the stronger the point is. The entire concept of J-Chart is based on chaos theory but not in the Bill Williams sense. It just goes that equilibrium WILL go into chaos, and after chaos, equilibrium. As such, with the volume recorded per price, you are able to recognize the state of the market.

Back to main topic. I find one thing strange about people on this forum is that, they do not know the calculations behind currency rates. They just take price for what it is. For instance, you take EURUSD * USDJPY = EURJPY rate. Basic calculations like these are vital for understanding correlations. People often take positions like short eurusd and short usdjpy not knowing that to see their basic position, just look at the EURJPY charts.

On relative strength, I know a full time trader who firstly sees the USD Index chart, and when there's a signal, he then trades the stronger/weaker major out of the 4 majors.

I have a way of finding relative strength that might not or might work for you guys. Basically I take the 3 day MA and refer it to the 5 day MA. From the values I get, I look at which is the stronger currency. Of course, you can just eyeball the chart and simply see which currency is doing better. I only use these on daily charts so I do not know if its applicable for you.

But sometimes in FX, it's all about common sense and knowing which pair to go with. For instance, you have a view that EUR is going down, but what to short it against? The USD is weak as well, so strike it off. The Yen seems like a good candidate, because of its resilience during this whole sub-prime fiasco, so it's a good shot.
  • #76
  • Edited 11:39pm Oct 5, 2008 10:28pm | Edited 11:39pm
Thank you all for a great thread!

I have been thinking along the lines of looking at individual currencies for the sake of what we may call screening. Instead of looking for your favorite setup across 20+ pairs, just look at 7~8 individual currencies. I use several systems; instead of flipping thru my profiles and templates, I could just look at the individual currencies. If one gives an up signal and another a down signal, only then do I look at the chart of the pair and take the trade.

I am still looking for the optimal way to do this: I want to be able to chart individual currencies just as pairs in MT4, with the ability to easily change tfs, add indicators, apply templates, etc.

I don't have the time to program this myself. If I did, I would use good baskets with published formulas [e.g. The Markit iBoxxFX indices]. An alternative, which may have been mentioned here, is the MT4 platform from ForexLTD (US$ and EUR indexes only), or Straighthold Investment Group, Inc. but their baskets are somewhat odd.
  • #77
  • Edited 2:48pm Oct 6, 2008 2:08pm | Edited 2:48pm
Quoting Pipsqueak4x
1. GBP/USD Up and USD/CHF Up - Cross will move UP STRONG (Primary trade objective moves)
2. GBP/USD Down and USD/CHF Down - Cross will move DOWN STRONG (Primary trade objective moves)
I've been working with this very basic setup just to get a feel
for what the interactions between pairs looks like real-time.
Except that I'm looking at EUR/JPY as the cross. It's been
pretty interesting so far!

Mostly I'm making better trades.

However, when I'm stubborn and try to trade the setup
when one of the pairs is being difficult (e.g. like the way that
USD/JPY was for me last night) it wreaks havoc on the setup
and thus the cross big-time!

Note to self: Co-operative underlying pairs = good cross trades.

P.S. Duh.

  • #78
  • Oct 6, 2008 2:37pm Oct 6, 2008 2:37pm
Hi Jody,

How exactly are you deriving your values using the 3 and 5 MAs and then deciding which pair is weak and which strong?

Thanks,

Lenoxer
  • #79
  • Oct 6, 2008 4:25pm Oct 6, 2008 4:25pm
I tried this last night with the EUR/JPY:

EUR/USD moving down
USD/JPY moving down

EUR/JPY dropped over 200 points

Very nice !!!

Quoting FXSurfer
I've been working with this very basic setup just to get a feel
for what the interactions between pairs looks like real-time.
Except that I'm looking at EUR/JPY as the cross. It's been
pretty interesting so far!

Mostly I'm making better trades.

However, when I'm stubborn and try to trade the setup
when one of the pairs is being difficult (e.g. like the way that
USD/JPY was for me last night) it wreaks havoc on the setup
and thus the cross big-time!

Note to self: Co-operative underlying pairs = good cross trades.

P.S. Duh.

  • #80
  • Oct 6, 2008 4:42pm Oct 6, 2008 4:42pm
Quoting BeachBum
I tried this last night with the EUR/JPY:

EUR/USD moving down
USD/JPY moving down

EUR/JPY dropped over 200 points

Very nice !!!
Nice indeed, BB!


P.S. Please send him a nickel. LOL

Quoting Pipsqueak4x
give me a nickle, OK?
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