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Currency meter trading - strongest v weakest

  • #61
  • Edited 8:56am Feb 7, 2010 8:05am | Edited 8:56am
Quoting Vantage
Its difficult to put down briefly what took years to look at consider, reject etc etc.

You first need to decide what kind of trading suits you. I for the life of me struggle to hang into trades and cannot remember the last time I held a trade overnight. So I trade short term.

There are many ways to consider trend, it does however depend on the time frame you are looking at, 1 min could be going up whilst 4 hr heading down etc etc.

For my short term purposes I generally look at 1 hr being above/below a 21 ema as my trend.

My main method...
Good interesting thread, Vantage and very sound advice. Interesting tool, too.

Yullah . . You might also look into price action, which includes trader sentiment, supply and demand (Vantage is obviously a pro with all of these principles). There are a few webinar transcripts on the subject over on Fxstreet (most of these are commercial, so I won't post names, titles or endorse them).

Only have had a few hours to look at CM, and am definitely interested. Got a feeling that time frame is not going to matter. CM should fit nicely with most good trading systems as a tool to verify your signals, I think.

It will be interesting to see how the CM reacts with retracements, trend changes, continuations, and breaks in support and resistance. Perhaps the distance between two currencies can tell us something.

For instance, GBP is 7.0 and USD is 2. You are naturally long on the GU, and have entered trade per your own trading rules.
Now, lets say you have a little profit, and the GU goes into a retracement. Will this "gap" narrow? say to GBP 5.0 and USD 3? How narrow to let it get before taking your profits?

Could be, since these strengths are obtained across so many pairs, that a retracement with one pair might not show on the CM. Has anyone observed this?

IF we compare notes, maybe can some additional trading rules to filter entries and exits. Hmmm . . .

I also like to basket trade the JPY from time to time. CM could be very good for this too.

Also not quite vintage,

Shakey
  • #62
  • Feb 7, 2010 8:51am Feb 7, 2010 8:51am
Quoting Vantage
Oh as always don't trade with real money until you are comfortable with a method. When you are then move to a small acc and again when comfortable move on to bigger trades from there.

Trading with real money is diff from demo trading. I feel that even if you are losing money that may be insignificant to you financially, mentally losing money is NOT something you want to be getting in a habit of doing.

A moment of levity, since the market is closed and thread is slow . . .

The life of a newbie (i am by no means a pro, nor am I a newbie)

1. Notice a website from a broker, this looks easy, download demo

2. Fumble around until you hit a couple of big trades, thinking how easy it really is, and not noticing that your demo account balance is actually going DOWN

3. Open live mini account

4. Trash Account

5. Add more to account, thinking that it's just bad luck

6. Notice that this account is trashing too.

7. Read BabyPips, and think Oh! now Ive got it!

8. Continue to trash account while telling all your friends how much money you are making

9. Start exploring forex factory in a desparate attempt to make this easy

10. Have a little success

11. Get over confident

12. Lose your new found profits

13. Start drinking and smoking

14. Give up

15. Start thinking about it some more

16. Tell yourself you really weren't that bad at it, and in a burst of optimism, find yourself opening an new demo

17. Have some success at demo, open another live account

18. Get the idea that if you throw some REAL money at it, that what it takes to be successful

19. Begin the process of trashing yet another account

20. Catch hell from your wife for spending hour after hour in front of the screen while your house is falling down around your ears. Even the dog is bored with you.

21. In a drunken fog, you use a fly crawling across the screen as a technical indicator

22. Get a divorce

23. Get a girl friend half your age, whose name ends with an "i" (Kandi, or Brandi)

24. (if you are lucky) Finally get a clue that it isn't the system that is bad, but it is your own trading habits and discipline. Perhaps you begin making a little money. Finally realize you are not gonna get rich overnight.

25. Find out that your girlfriend has run up a $500 bill texting a middle aged country club golf pro on the new Iphone you gave her.

26. Dump her

27. Go through re-hab

28. Get wife back

29. And maybe . . . Just maybe . . . you successfully begin growing your account balance.

Alas, this is the learning curve of the newbie trader

Shakey
  • #63
  • Feb 7, 2010 9:24am Feb 7, 2010 9:24am
roflmao
  • #64
  • Edited 5:59pm Feb 7, 2010 2:51pm | Edited 5:59pm
Vantage,

I see that Billbss introduced me earlier in thread.

From what I've read in your posts, there are marked similarities in our approach to trading. (I'm not that experienced, however.) What I like to do is try to stack as many potential 'independent' edges in my favor as possible. What I mean by independent is this: attaching more indicators on a chart does not necessarily provide independent confirmation, because all indys on a given timeframe are ultimately derived from the same OHLC. I see multi-TF analysis as being semi-independent, and the use of a CM as being semi-independent also, as it is bring data from other currencies into the analysis. I also believe that visibility (explained here) potentially provides an edge.

About CMs. I'm not trying to promote my own indicator (here); after all it's a freebee, and there are plenty of similar CMs available in other threads. I prefer to see strength/weakness as a trend rather than merely a fixed value. Here's one reason: There are some good threads like this one that discuss the use of fundamentals as a leading indicator, for medium/long term trading. I'm too lazy (LOL) to understand all of this stuff, but I assume that if (for example) the Euro is weakening, then there are fundamental/economic reasons why, which, if enough influential traders heed them, the technicals will confirm. So I use the W1 and D1 trends in my CM to act as a proxy for the fundamentals. Then I'll pick currencies that are negatively correlated (i.e. strongest against the weakest) and check how strongly their D1 charts are trending, accordingly. That gives me pairs to focus on, and a long term trend direction. Then I look for high momentum candles (e.g. hammers/pinbars, outside bars, engulfing bodies, railroad tracks) that signal a powerful resumption of the prevailing trend, following a pullback.

I like multi-TF analysis, i.e. given that price moves as waves within waves, then if the D1 candles are bearish, then the probability of short intraday trades being profitable increases. So then, having used the long term analysis to provide all of pair selection, trend direction and probable momentum, I apply similar logic to yours on intraday charts, to time my entries and exits. I also use momentum candles and S/R (more here) and also as described in the 'visibility' post above.

A few more words about currency strength. But to save typing, I'll simply point you to this post. The more negatively correlated two currencies are, the longer, stronger and cleaner the trend in the resulting pair tends to be. Conversely, the charts of pairs involving positively correlated pairs undergo sideways movement, with lots of overlapping candles with long wicks.

I believe that the best any technical trader can do is to stack as many independent edges in his favor as possible, and then do his best to manage the trades that result.

Please feel welcome to use, and develop any of these ideas further, however you see fit.

Good luck – all the best,
David

Footnote:
There's a thread using an Excel-based CM that's similar to yours here.
In response to a request, I also wrote a MT4 based version of this CM here.
You might also find some useful info on currency strength in the threads here and here.
  • #65
  • Feb 7, 2010 4:47pm Feb 7, 2010 4:47pm
Hi Hanover,

I have installed your indi, I like the flexibility and it is less intrusive, so thank you once again for your contribution to FF.
Money grows on the tree of persistence
  • #66
  • Edited 3:22am Feb 8, 2010 2:36am | Edited 3:22am
Quoting Beshakey
Good interesting thread, Vantage and very sound advice. Interesting tool, too.

Yullah . . You might also look into price action, which includes trader sentiment, supply and demand (Vantage is obviously a pro with all of these principles). There are a few webinar transcripts on the subject over on Fxstreet (most of these are commercial, so I won't post names, titles or endorse them).

Only have had a few hours to look at CM, and am definitely interested. Got a feeling that time frame is not going to matter. CM should fit nicely with most good...
Thanks Shakey.

I find myself classified as a commercial trader and cannot post elsewhere. There was a post on the higher low lower thread, yep I cannot post there on my own thread. Can someone pls ask that person to post here.
Thanks.
  • #67
  • Feb 8, 2010 2:38am Feb 8, 2010 2:38am
Quoting Beshakey
A moment of levity, since the market is closed and thread is slow . . .

The life of a newbie (i am by no means a pro, nor am I a newbie)

Shakey
Yeah and that process can take weeks, months or years!!!!
  • #68
  • Feb 8, 2010 2:39am Feb 8, 2010 2:39am
Quoting hanover
Vantage,

I see that Billbss introduced me earlier in thread.

From what I've read in your posts, there are marked similarities in our approach to trading. (I'm not that experienced, however.) What I like to do is try to stack as many potential 'independent' edges in my favor as possible. What I mean by independent is this: attaching more indicators on a chart does not necessarily provide independent confirmation, because all indys on a given timeframe are ultimately derived from the same OHLC. I see multi-TF analysis as being semi-independent,...
Thks David. I will study this post and attachments in greater detail as soon as time permits, ie when the market quietens down a little.
  • #69
  • Feb 8, 2010 2:42am Feb 8, 2010 2:42am
Hi yullah

I referred you to the Andrew Forex thread as some of the hl/lh trading principles are good. OK take your charts change his trend magic and nondotlag indi's to a 21 ema and an 8 linear weighted ma.

Close enough?
  • #70
  • Edited 3:24am Feb 8, 2010 3:03am | Edited 3:24am
At the moment Mrs V and I are looking to trade CM with 1hr and 1 min charts up.

This morning 6am London time GU 1 hr had a neg close candle and perfect lower highs on 1 min.

As long as currencies are weak we will re-enter crosses of 8 lin weighted ma (lwma) on closed 1 min candle and where price carries on that 1 pip.

I'll attach some charts next.
  • #71
  • Edited 3:26am Feb 8, 2010 3:15am | Edited 3:26am
From around Frankies hour -FH- 7am London time the CM turned around with eur, chf strong and usd jpy weak.

That gave buys on eurusd, eurjpy and sells on usdchf.

We bought eurusd and eurjpy. 1st eu buy at 3647. We bought again at 3676 ie cross of 8 lwma on closed candle + price moved on.

I've shown with an x a none trade as price crossed lwma but did not move on 1 pip.

There was another buy just below 3700 as usd staying weak and eur still strong. exited here with 5 pips when there was no follow through.

I would still like to look at methods of trading when currencies are turning say from 6 and 2 to 4 and 4 and 3 5 as there must be big moves behind that.

At present we are looking just at those pairs that have big differences, ie around 4 eg 6 to 2, pull backs and cross of 8 lwma when currencies remain strong/weak.

Dare I say it a stress free morning with good pips.

I haven't shown the ej chart no need very similar pic as eu.
Attached Image (click to enlarge)
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  • #72
  • Feb 8, 2010 3:33am Feb 8, 2010 3:33am
Quoting hanover
Vantage,

I see that Billbss introduced me earlier in thread.

From what I've read in your posts, there are marked similarities in our approach to trading. (I'm not that experienced, however.) What I like to do is try to stack as many potential 'independent' edges in my favor as possible. What I mean by independent is this: attaching more indicators on a chart does not necessarily provide independent confirmation, because all indys on a given timeframe are ultimately derived from the same OHLC. I see multi-TF analysis as being semi-independent,...
David thankyou so much for taking the time to do such a great post. I have not been through all the attachments as yet but no mistake I will do.

I am just sorry that having been classified as a commercial trader I cannot participate in the threads you mentioned.

Once again though thanks so much.
  • #73
  • Feb 8, 2010 3:58am Feb 8, 2010 3:58am
Quoting Beshakey
For instance, GBP is 7.0 and USD is 2. You are naturally long on the GU, and have entered trade per your own trading rules.
Now, lets say you have a little profit, and the GU goes into a retracement. Will this "gap" narrow? say to GBP 5.0 and USD 3? How narrow to let it get before taking your profits?

Could be, since these strengths are obtained across so many pairs, that a retracement with one pair might not show on the CM. Has anyone observed this?

IF we compare notes, maybe can some additional trading rules to filter entries and exits....
Hi Shakey
I am sticking to my previous trade rules being if price hits a key area especially if it has got near to any kind of decent daily range I am exiting at signs of weakness. The reason being if price hits gu 5625 for want of a better price and it hesitates there and I exit at say 5622 ok.

If price retraces 15 pips and cm confirming the strength still and I get in again off 1 min at virtually any price with a 10 pip stop. If it goes fine, if not I am probably no worse off with a 10 pip stop than if price had fallen and I was still in the original trade.

Every time I bank pips I am prepared to re-enter by 1 min trade rules mentioned above (you could also look at thread Mrs V's fave 1 min entry except we no longer use indi's but shows how long we have done 1 min entries). The eu chart above gives clear examples.

Your question
Could be, since these strengths are obtained across so many pairs, that a retracement with one pair might not show on the CM. Has anyone observed this?
This is exactly true, 1 pair can go counter the CM, there is no g/tee.

Last week I had a trade, gbp was weaker than usd but not much. GU went up against this signal. It stopped had a nice little lower high and fell for around 60 pips over a couple of trades when gbp weakness and usd strength did kick in. Pending that fall there were chances to make nice trades from pairs that were lining up.

Yes when jpy is weak/strong basket trades could be good but now you can do that basket honed in a little more to the stongest/weakest jpy crosses.
  • #74
  • Feb 8, 2010 4:15am Feb 8, 2010 4:15am
Quoting Vantage
My first reaction is the CM I have shown is very simple. A currency is either strong or its not right now, also thats a lot of lines to have to look through on a lot of time frames.

Having said that the fact that its a true mt4 indi means you can back test.
This is like something Orest posted some time ago
  • #75
  • Feb 8, 2010 4:21am Feb 8, 2010 4:21am
Quoting dinhero
This is like something Orest posted some time ago
Could well be I understand its been around for a while.

I have done some solid low risk trades using this in conjunction with my normal trading and so far very happy.
  • #76
  • Edited 9:20am Feb 8, 2010 4:23am | Edited 9:20am
I do want to look at set ups where say gbp 4 and eur 2, not a big diff and it starts turning around to say gbp 2 eur 4, a total swing of 4 and quite likely to generate trades.

We have not done any like this but its on the agenda.
  • #77
  • Feb 8, 2010 9:20am Feb 8, 2010 9:20am
A very dull last couple of hours with most currencies very close. Gbpusd opened up a gap of 2, 3.6 to 5.6-ish, which has started a move with a few 1 min hl chances to get in.

This is just a note for future reference no idea yet if after deadlocked CM numbers a 2 point gap is worthwhile or an opportunity to scalp 15 pips or so.
  • #78
  • Feb 8, 2010 9:20am Feb 8, 2010 9:20am
Quoting Vantage
A very dull last couple of hours with most currencies very close. Gbpusd opened up a gap of 2, 3.6 to 5.6-ish, which has started a move with a few 1 min hl chances to get in.

This is just a note for future reference no idea yet if after deadlocked CM numbers a 2 point gap is worthwhile or an opportunity to scalp 15 pips or so.
Did not trade this one myself.
  • #79
  • Edited Feb 9, 2010 12:29am Feb 8, 2010 9:23am | Edited Feb 9, 2010 12:29am
Possible trades

  1. strongest v weakest re-entry off 1 min bounces as long as the currencies are staying strong/weak
  2. turnaround a 4 and 2 for a pair turning to 2 and 4 ie a swing of 4 points (just an example on numbers the idea is the turnaround)
  3. deadlocked numbers pushing out to say a difference of 2. This one would be for scalping no doubt and if there are bigger moves in CM the opportunity to re-enter as per 1 above.

  • #80
  • Feb 9, 2010 12:28am Feb 9, 2010 12:28am
For now I'm going to concerntrate on gu, eu, ej and gj. That should give enough spread between the majors. If chf is on a tear I can bring those charts up but at the mo have 4 screens and 1 currency per screen.

Early morning jpy and usd weak and gbp, aud and nzd strong. Eur marginal. Decent moves up from gu, gj, ej and also eu.
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