FXCM/DailyFX Signals and Strategies

A nice drop overnight for USD/CHF as the pair set a new record low. The DailyFX+ signal is currently giving a hold signal on the two short positions that have been open from previous days. It could possibly be anticipating a retracement? DailyFX mentioned in an article earlier today that the CHF and JPY strength is being driven by turmoil in the Middle East.

http://img511.imageshack.us/img511/3...2420111005.png

Will post the updated SSI this afternoon to see if the short positions have decreased following the most recent drop.

Forex Tax Webinar

FXCM holds a free tax webinar each year hosted by Robert A. Green, CPA and CEO of GreenTraderTax.com, and we're happy to announce that Robert is planning to hold 4 webinars during the month of March. They'll mostly be geared towards tax reporting for US residents. Here's the schedule:

 

1. Tuesday, March 1 at 11 AM ET
2. Thursday, March 10 at 4 PM ET
3. Tuesday, Mar 15 at 11 AM ET
4. Thursday, Mar 24th at 4 PM ET

If you plan to attend, please register ahead of time since space in the webinar is limited. More details and registration can be found here http://forexforums.dailyfx.com/forex...tml#post748552

Custom Tick Charts in Marketscope

The Strategy Trader platform allows you to create candlestick charts based on number of ticks and number of seconds. This option is not built into Marketscope, but FXCodeBase.com has created two custom indicators which can do this: number of ticks and number of seconds.

Whenever you add the indicator onto the chart, I would recommend specifying the location of the indicator to show in a new area below the existing chart area. Take a look at the screenshot below to see what I'm talking about:

http://img825.imageshack.us/img825/9...properties.png

Once you have the indicator added onto the chart, you will need to increase the size of the indicator window at the bottom to display the custom tick candles. Below is an example of a 50 tick candlestick chart. You will need to increase the size of the indicator window to view more detail. Also notice that there's a number listed on the most recent candle. It counts the number of ticks in the current candle. Once it hits 50, a new candle starts.

http://img25.imageshack.us/img25/365...art2282011.png

If you need help installing a custom indicator into Marketscope, see my "How To..." guide in this post: http://www.forexfactory.com/showthre...7&#post4176837

A lot of interesting positioning in this morning's SSI. The one I find most interesting at the moment is EUR/USD SSI, currently at -2.44. If you look at the historical SSI bar chart, you'll see that EUR/USD SSI positioning on the short side over the past 6 months has historically reached a maximum of about -2.50.

http://img192.imageshack.us/img192/3...01192918am.png

Event risk will increase at 10am ET with the release of the ISM manufacturing survey, and Fed Chairman Ben Bernanke will also be speaking in front of the Senate Banking Committee.

Joel Kruger mentioned in his daily tech update this morning that EUR/USD looks poised to break above 1.3860. I'm inclined to think there could be a potential breakout with SSI positioning overall short and the possibility for major event risk coming up. Here's what Joel had to say in his technical update:

EUR/USD:The market remains very well bid, with key short-term resistance by 1.3745-65 being easily cleared to now put the focus on next topside barriers at 1.3860. The 1.3860 level represents the current yearly high, and a break above will then open the door for a fresh upside extension towards psychological barriers by 1.4000 which also guard against the more significant medium-term resistance at 1.4285 from November 2010. There is still however the risk that the market stalls out in the 1.3800’s, but a failure at or near 1.3860, and break back below 1.3700 would be required at a minimum to relieve current topside pressures. http://www.dailyfx.com/forex/technical/article/morning_slices/2011/03/01/Euro_Poised_for_Break_Above_13860.html

Yesterday I mentioned a custom indicator available from FXCodeBase.com for the Marketscope chart. In looking through FXCodeBase, I noticed some interesting new indicators I thought you would find useful, so I picked out 5 of the ones I thought you would find most useful. You can find many more custom indicators and strategies directly on the FXCodeBase.com website. And all of the indicators and strategies can be added to the Marketscope charts in FXCM's FX Trading Station II platform. If you don't have the platform, you can register for a demo here.



1.Display Trading History on Chart
The Marketscope chart will display current trade information and recent historical trade information directly onto the chart. However, the chart will not display all of your historical trading history. The solution is to use the trading history indicator. If you look at the screenshot below, I added the trading history indicator to the USOil chart and it displayed trading history from October 2010 through January 2011. Profitable trades are indicated by a green arrow, and losses are indicated by a red arrow. You can choose to have the trades connected from open to close by a line.

http://img194.imageshack.us/img194/8...inghistory.png

Download



2.Symbol Correlation
DailyFX releases a currency correlation report which shows how currency pairs move in relation to each other. Instead of waiting for the report to be released, you can use this indicator to quickly identify currency correlations between any currency pairs, and for any time period. In the example below, I have compared the GBP/JPY with the SPX500 which tracks the S&P500 stock index. This is an interesting correlation because the GBP/JPY and equities markets were highly correlated during height of the carry trade. The chart on the left shows the GBP/JPY & SPX500 correlation from 2008-2010, and you’ll notice the correlation was 0.895. A correlation of 1 indicates a strong positive correlation, meaning the two symbols move in tandem. In the next chart on the left, you’ll see the correlation has broken down to -0.207 from 2010 until 2011. A correlation of 0 indicates no apparent correlation, the movements are seemingly random to each other.

http://img98.imageshack.us/img98/985...orrelation.png

Download



3.Constant Range Bars
The constant range bar indicator allows you to create candlesticks based on a specific number of ticks. For example, you could create 100 tick candles. The candle will be based upon number of ticks rather than time. The below screenshot shows a constant range bar chart of 100 ticks on the left and a 5 minute candlestick chart on the right. Both charts cover the same time period. The difference is that the chart on the left creates a new candle after every 100 ticks, and the chart on the right create a new candle every 5 minutes. Notice also that the CRB chart has a blue number on the most recent candle. That number counts the number of ticks in the current candle. If have set the indicator to 100 ticks, then the candle will close once that blue number hits 100.

http://img203.imageshack.us/img203/4...01123011pm.png

Download



4.Movers and Shakers
This indicator shows you which currency pairs or symbols have had the biggest percentage/pip movement for the specified time. For example, I just sit down at my computer and I want to know which symbols have had the biggest move over the past hour, day, week, or month. This indicator gives you that information. The below image is an example of what it looks like. I have sorted all of the information by percentage gain/loss for the day. On the left you have all of the symbols with a percentage gain for the day, and they are in order of largest percentage gain to smallest. On the right you have the symbols with a percentage loss for the day, and the symbols are organized by loss from smallest to largest. The indicator will only calculate the percentage gain/loss for the symbols displayed in the dealing rates window. From the screenshot, you’ll see that oil, gold and silver have the largest gains for today, up nearly 2%. The stock indices have the largest losses for the day at 1%+. And the currencies are in the middle.

http://img30.imageshack.us/img30/168...ers3120111.png

Download


5.Gross P/L
The Gross P/L indicator will display the Gross P/L for all open positions in a window at the bottom of the chart. This way you can keep track of the profit/loss on all of your positions when viewing one specific chart. In the image below, I have 9 trades open on the demo. I can quickly tell that positions in 5 of the currency pairs traded are in a profit, and 4 of the currency pairs traded are in an overall loss.

http://img339.imageshack.us/img339/4...11121123pm.png

Download


If you have any suggestions for custom indicators or would like to give feedback, please don't hesitate to post directly onto the FXCodeBase.com website!

EUR/USD & GBP/USD Signals: The breakout strategies for EUR/USD and GBP/USD have both generated long signals within the past couple of hours. SSI positioning for both pairs has been net short for quite a while now, and both pairs are trading just beyond significant resistance levels at this point. Here's a look at the EUR/USD signals:

http://img856.imageshack.us/img856/7...ut32201110.png

Automated Strategies on Marketscope

Yesterday, I posted about 5 custom indicators available for Marketscope. The majority of the downloads on FXCodeBase are custom indicators, but the library of custom strategies is quickly increasing. Below are 3 strategies I found interesting. If you have ideas for strategies, please post them directly to the FXCodeBase website!

1. Close at Time

This strategy is fairly straightforward. You indicate the ticket number to close and the time and date to close the trade, and the trade closes when the specified time is reached. For example, maybe you want to close a position on Friday at 8:25am ET before NFP is released or before triple rollover at 4:45pm ET on Wednesday. This strategy allows you to do that. Simply set the date and time. Below is a screenshot of the alert message that appears when the strategy executes. I set the strategy to close a CHF/JPY position, although the symbol in the alert window says EUR/USD. Don't panic. The symbol simply indicates the currency pair of the chart which you added the strategy to. The currency pair displayed on the chart has no impact on the ticket you selected in the strategy properties. The strategy simply needs to be set onto any existing chart with the appropriate ticket selected in the strategy options in order for it to execute.

http://img845.imageshack.us/img845/5...201112111p.png

Download


2. Breakout Strategy

This strategy uses the breakout indicator to place trades (so you will also need to download the breakout strategy for marketscope if you do not have it). The breakout strategy measures the trading range from 17:00pm ET through 23:00pm ET. It then looks to trade breakouts beyond this range for the remainder of the trading day. The trading hours can be modified in the strategy options. Below is an image of what it looks like. The green lines define the range from the Asian session and the red shaded area marks that period of time. The image also contains white alert signals where the strategy has bought or sold.

http://img853.imageshack.us/img853/8...utstrategy.png

Download


3. Moving-average Based Stop Order

This strategy creates a stop loss order at the specified moving average line. As the moving average line changes with each closing candle, so too will your stop loss order. If you look at the example below, you'll see I have two short positions in USD/CAD and there's a 50 period simple moving average on the chart. The stop loss order is automatically created at the 50 period moving average line.

http://img651.imageshack.us/img651/8...veragestop.png

Download

After i downloaded it, and import using the fxcm software, and load it, it says:" indicator to use it is missing" something like that.
But it doesnt say what exactly is missing.

hey M.Y.

Is it saying this when you try to use the Breakout Strategy? If so, make sure to install the Breakout Indicator as well located here http://fxcodebase.com/code/viewtopic.php?f=17&t=966 . I should have put a little more detail in that section .

Jason

A quick note about adding custom indicators and custom strategies to Marketscope. The location for adding each is different. If you look at the image below, the custom indicator should be added by clicking on Chart > Manage Custom Indicators. The custom strategies should be added by clicking on Strategies > Manage Custom Strategies.

http://img851.imageshack.us/img851/9...rategy3320.png

yes, it is breakout one.

i added the breakout indicator already, and i can see the red, blue boxed area like the way i wanted.

After playing it for a while, i found out the code is reading the indicator the way it is put on that site, so i cant rename it. So without renaming, it works.

Where do you use the backtest (of any strategy) and show the white marker?

Goto the top of Marketscope and click on Strategies > Test Strategy

http://img84.imageshack.us/img84/180/backtest.png

Next, a window will open with the BackTest Properties. The backtest properties will automatically list a strategy, but you can click on the box to choose a different strategy. If you look in the example below, I clicked on the grey box with 3 black dots, and it opened the Strategy Properties window where you can select the specific strategy.

http://img8.imageshack.us/img8/1563/...properties.png

After you press OK in the boxes, the backtest will appear on the chart with the white markers.

The DailyFX Weekly Forecast for this week talked about a possible reversal for the EUR/USD, and yesterday Moody's downgraded Greece with a negative outlook. This is now putting to test the EUR/USD uptrend which started in the first half of February, see below:

http://img836.imageshack.us/img836/5...3820111113.png

So how are the DailyFX+ trading signals positioning in relation to today's EUR/USD selloff? Momentum2 generated a bearish signal and the market is still trading near the open price. This morning's SSI release at 11:00 GMT had EUR/USD SSI at -2.01 which indicates bullishness, and the Momentum2 uses SSI data to identify shifts in market sentiment. Maybe EUR/USD SSI has shifted from net short to net long. This would seem to be a significant event leading to a short signal. We will have to take a look at the SSI update this afternoon to see if there has been a significant change in positioning. Here's the EUR/USD momentum2 signal:

http://img560.imageshack.us/img560/6...dingsignal.png

RBNZ rate decision comes out today at 3:00pm ET (20:00 GMT). DailyFX will be hosting a live trading room during the announcement with live coverage of the market, and taking your questions. The trading room opens at 2:45pm ET (19:45 GMT) and can be accessed here: http://www.dailyfx.com/live_forex_trading_room/ . There is audio, video, and a chat room where you can post questions. Here's what DailyFX is expecting:

The Reserve Bank of New Zealand is widely expected to lower the benchmark interest rate by 25bp to 2.75% in March, and speculation for another round of monetary easing could spark a sharp selloff in the exchange rate as investors weigh the prospects for future policy. According to Credit Suisse overnight index swaps, investors a pricing a 100 percent chance for a rate cut this month, and the central bank may look to support the real economy throughout 2011 in an effort to stem the risk for a double-dip recession. As the region copes with the aftermath of the natural disasters, the RBNZ may continue to curb their outlook for growth and inflation, and dovish comments from the central bank is likely to exacerbate the downturn in the exchange rate as interest rate expectations falter.
http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/trading_news_reports/2011/03/07/NZDUSD_Trading_the_Reserve_Bank_of_New_Zealand_Interest_Rate_Decision.html

http://img94.imageshack.us/img94/920...03092000ki.png

CNBC's Money in Motion Currency Trading tv show sponsored by FXCM premieres tomorrow, March 11 at 5:30pm ET. It was originally scheduled to launch on Feb. 25th, but it was delayed 2 weeks. Here are the show times:

United States
Premieres Friday, March 11th 5:30p ET

Europe
Premieres Friday, March 11th 23:30 CET

Asia
Premieres Saturday, March 12th 0630 SIN/HK

Australia
Premieres Saturday, March 12th 0930 AEDT

USD/JPY

Market volatility is starting to increase following the events in Japan on Friday. The first question is how will the events affect the Yen. DailyFX released an article yesterday reviewing the aftermath of the 1995 Kobe earthquake and how the Yen reacted in the following months. Here is a chart of USD/JPY from 1995:

http://media.dailyfx.com/illustratio...y_usdjpy95.png

From DailyFX:

Following the 1995 earthquake, the Yen rose to historical highs against the Dollar, dropping below the psychologically significant 80.000 level in the wake of the disaster. The Nikkei fell 6.18 percent today following 1.70 percent losses on Friday, after a weekend of assessment left traders disparaged. In the next six months, the Nikkei fell another 24.7 percent; in the following ten months, the Nikkei jumped 52.2 percent.

The complete article can be found here: http://www.dailyfx.com/forex/fundame...en_EDITOR.html

How are traders reacting?

The latest SSI positioning report shows traders are still very much long USD/JPY.

http://img20.imageshack.us/img20/860...201195808a.png

The Bank of Japan has a monumental task in front of it trying to keep the markets stable while also trying to prevent the Yen from strengthening. The BOJ is pumping large amounts of liquidity into the system according to this Marketwatch article:

News reports said the central bank, in two separate measures, offered a total of 8 trillion yen ($98 billion) via one-day operations on Tuesday. The move comes on top of a record ¥15 trillion injection on Monday.

Also, the central bank said it would buy ¥2 trillion in bonds from March 17 to 18 through repurchases, and inject an additional ¥5 trillion into the financial system from March 17 to April 18 and another ¥5 trillion from March 16 to March 23.

This will have an impact on rollover for JPY pairs so please be aware of any JPY positions being held open at 5:00pm ET.


USD/CHF

The second pair I want to discuss is USD/CHF. The CHF seems like the most likely candidate for money seeking a safe haven. Hence the USD/CHF continued to drop to new record lows this morning. Looking at the SSI positioning data again listed above, nearly 87% of positions in USD/CHF are long. The SSI is a contrarian indicator and signals more USD/CHF losses:

http://img816.imageshack.us/img816/2...11100851am.png

Something also interesting I just read in this article on Reuters:

"Foreign investors are heavily invested in Japanese stocks and for the moment that's leading to yen outflows which is helping to compensate for the expectation of yen repatriation," said Manuel Oliveri, currency strategist at UBS in Zurich.

Could it be that outflows from foreign investors liquidating holdings in Japan are helping to keep USD/JPY from dropping for the time being? Something interesting to think about especially considering the chart in the DailyFX article shows that it took a month or two to see a significant drop in USD/JPY due to repatriation of funds and insurance money flowing back into Japan.

Yesterday's price movement in the JPY pairs after the NY close was quite incredible, bringing up memories of the market movement during last year's flash crash. The next big question is whether we will see any intervention to stop the JPY from falling even further. Answers could come in the form of a G7 finance ministers meeting later today around 22:00 GMT (6:00pm ET). Here's some information from Reuters article:

...Japanese Economics Minister Kaoru Yosano told Reuters that neither currency nor stock markets were in a state of turmoil that would warrant G7 action and said Tokyo was more interested in "psychological support" from its partners.

A source from a G7 country who requested anonymity, also said the call, which is expected to take place around 2200 GMT, was unlikely to result in concrete decisions....

......A big concern for G7 financial leaders will be the potential for a surge in yen repatriation to Japan to unsettle global markets.

In addition, many investors borrow in yen to fund investments in other currencies, so may be vulnerable if their positions are squeezed. That also would push the yen higher.
Source: http://ca.reuters.com/article/topNew...7EH14Q20110317

Looking at this morning's SSI positioning data from DailyFX+, traders are still long the USD/JPY and USD/CHF. Long positioning has dropped a little from yesterday, likely after stop losses and margin calls on long positions, but long positioning is still above 80% for both of these pairs. Traders are still trying to fight this one and have to be hoping for some sort of intervention at this point.

http://img251.imageshack.us/img251/5...01195437am.png

Also note that traders are net short EUR/USD which is signalling a Breakout2 signal from the DailyFX+ signals. The first target for the Breakout2 signal is 1.4088:

http://img850.imageshack.us/img850/2...011100111a.png

Congrats to everyone who shorted JPY yesterday


DailyFX is hosting 13 living trading events next week. The events schedule can be found here: http://www.facebook.com/DailyFXnews?sk=events