CSMA System – Currency Strength Moving Average System
A Simple Technique Which Delivers
Disclaimer:-
Although my system is profitable and I trade it with success, my system carries the exact same amount of risk which any other Forex system carries. If testing this, be sure to use a demo account, and trade on a live account at your own risk. Any profits or losses you may incur are your own responsibility.
Contents:-
[1] What's so special about this system?
[a] System Introduction
[b] How Does the Currency Strength Meter Work?
[2] The System
[a] Step by Step
[b] Summary
What's so special about this system? So many failed systems out there.
Allows you to dip in and out of the market whenever you like (to some degree)
Ideal for people who don't want to sit around waiting for support and resistance.
System Introduction:-
I started to play around with currency strength meters for some time many months ago, but unfortunately never found the ideal one I was looking for. After many months of searching I came across Henry Lius currency strength meter, something he developed and uses himself. At first glance and at first use I found the meter to be useless, mainly because going off one simple meter just wasn't consistent enough, in any way to be profitable on a daily basis with.
To cut a long story short I tried to use the strength meter in hand with other Forex indicators, such as stochastic crosses, trendlines etc; but really had no luck at all. This is when the simple thought of using a basic moving average crossed my mind. I'm not a massively patient person, and I hate having to wait for price to touch a trendline or area of support/resistance, I want to be in the thick of the market movements at all times. This system is ideal for the adrenalin junkie who likes to be sat in front of charts regularly.
How does the currency strength meter work?
The meter works like most other CS meters however, there is one massive difference, and this is the difference which I love the most. The CS meter is NOT binded to an individual timeframe like many other CS meters, it doesn't vary every time you change the time frame on your charts, it's a glove which fits all hands.
The meter is a stand-alone application which is run using an external terminal, unlike most meters which run via the MT4 platform themselves. This means whether you're using a brokers own platform or any of the Metatrader platforms, this software will work. The CS meter developed by Henry Liu gives an overview impression of the market, and as I said before, does not rely on one timeframe, it's a global application which gives you an entire sense of market direction.
Remember when the Yen was really weak back in the week of 4th April? Well this currency strength meter picked up the move, and if you followed the meter along with my system during this week you would have bagged yourself over 500 pips!
To read more ins and outs of how the meter itself works, visit Henry Lius website here
That link gives all the information on how the software works.
The System:-
Now you're probably wanting to know the system so i'm just going to crack on with it. I use the currency strength meter running along side my MT4 Platform, the aim of the system is to find a weak currency but compare it to a strong one, and after this, the MA's come into play.
NOTE: If you haven't read how the meter works on Henrys site then please do before continuing to read any further. You can read everything you need to know here. http://www.currencynewstrading.com/3...ter-explained/
In short though, this is how it works, each currency is given a strength, RED being the highest and BLUE being the lowest. ORANGE Is fairly strong and YELLOW is usually ranging or of no interest to my system at all.
1) First off we want to see one strong currency, and one weak currency. Lets have a look now to see what the meter reads. (You can download the meter directly here - http://www.currencynewstrading.com/c...eter-download/)
Chart 1
Here we can see that the Euro is strong, matched with a very weak Pound, i'm looking for a long position here but I can't just go off the meter alone, I need my MA's to help me out.
2) The only other tool you need is to download an MTF MA MT4 indicator, you can do this manually by putting the moving averages straight on your chart yourself but as you will see shortly, it's much more easier to have them show up via an indicator.
(Download the indicator at the bottom of this post).
In the settings panel you want to make sure there is a 5 LWMA (Linear Weighted Moving Average) on each major time frame. Start with M30 then H1, H4 and D1.
So here we have M30 and the MA is period of 5. Scroll down and do the same for hour H1, H4 and D1 ie 60, 240 and 1440.
Once you have completed this, your indicator should appear as a bar at the bottom of the platform, and once all MA's are in the same direction the bar will light up BLUE for an uptrend and RED for a downtrend. If all of the MA's are not up or down, the bar will not light up.
Update: You need to make sure you're viewing this on the 30 minute time frame
The best thing about this indicator is that it uses price to cross the MA's instead of using another MA to make the cross, this way there is little or no lag at all.
3) It looks like the EUR is not only rallying up on the strength meter but it's also looking strong on all major time frames. As you can see below, everything is setup for a long entry. The MA's are up on all the major time frames. Time to put in a buy order with a 40 pip take profit and 20 pip stoploss.
Chart 1
After the order was entered, lets see what happened.
Chart 2
As you can see, price rallied up in a strong fashion, and this is exactly how you take every single trade.
Summary: -
It's entirely up to you on what money management techniques you use, but I do recommend not keeping your stop loss or take profits too tight. And remember, in this example trade, even after hitting a 40 pip take profit, so long as the MA's are still up and the Euro is stronger than the Pound, you could simply just enter another buy order. Just like what you could have done against the Yen earlier this month.
This strategy does come with losses, and that's why the 2:1 ratio is useful, also don't be greedy and make sure you take your profits without letting them run for too long.
In overview you don't always have to buy against a BLUE currency, you can buy against a yellow one as well. So long as you're going in the direction of the stronger currency ie the orange or red.
Indicator Download:-
A Simple Technique Which Delivers
Disclaimer:-
Although my system is profitable and I trade it with success, my system carries the exact same amount of risk which any other Forex system carries. If testing this, be sure to use a demo account, and trade on a live account at your own risk. Any profits or losses you may incur are your own responsibility.
Contents:-
[1] What's so special about this system?
[a] System Introduction
[b] How Does the Currency Strength Meter Work?
[2] The System
[a] Step by Step
[b] Summary
What's so special about this system? So many failed systems out there.
Allows you to dip in and out of the market whenever you like (to some degree)
Ideal for people who don't want to sit around waiting for support and resistance.
System Introduction:-
I started to play around with currency strength meters for some time many months ago, but unfortunately never found the ideal one I was looking for. After many months of searching I came across Henry Lius currency strength meter, something he developed and uses himself. At first glance and at first use I found the meter to be useless, mainly because going off one simple meter just wasn't consistent enough, in any way to be profitable on a daily basis with.
To cut a long story short I tried to use the strength meter in hand with other Forex indicators, such as stochastic crosses, trendlines etc; but really had no luck at all. This is when the simple thought of using a basic moving average crossed my mind. I'm not a massively patient person, and I hate having to wait for price to touch a trendline or area of support/resistance, I want to be in the thick of the market movements at all times. This system is ideal for the adrenalin junkie who likes to be sat in front of charts regularly.
How does the currency strength meter work?
The meter works like most other CS meters however, there is one massive difference, and this is the difference which I love the most. The CS meter is NOT binded to an individual timeframe like many other CS meters, it doesn't vary every time you change the time frame on your charts, it's a glove which fits all hands.
The meter is a stand-alone application which is run using an external terminal, unlike most meters which run via the MT4 platform themselves. This means whether you're using a brokers own platform or any of the Metatrader platforms, this software will work. The CS meter developed by Henry Liu gives an overview impression of the market, and as I said before, does not rely on one timeframe, it's a global application which gives you an entire sense of market direction.
Remember when the Yen was really weak back in the week of 4th April? Well this currency strength meter picked up the move, and if you followed the meter along with my system during this week you would have bagged yourself over 500 pips!
To read more ins and outs of how the meter itself works, visit Henry Lius website here
That link gives all the information on how the software works.
The System:-
Now you're probably wanting to know the system so i'm just going to crack on with it. I use the currency strength meter running along side my MT4 Platform, the aim of the system is to find a weak currency but compare it to a strong one, and after this, the MA's come into play.
NOTE: If you haven't read how the meter works on Henrys site then please do before continuing to read any further. You can read everything you need to know here. http://www.currencynewstrading.com/3...ter-explained/
In short though, this is how it works, each currency is given a strength, RED being the highest and BLUE being the lowest. ORANGE Is fairly strong and YELLOW is usually ranging or of no interest to my system at all.
1) First off we want to see one strong currency, and one weak currency. Lets have a look now to see what the meter reads. (You can download the meter directly here - http://www.currencynewstrading.com/c...eter-download/)
Chart 1
Here we can see that the Euro is strong, matched with a very weak Pound, i'm looking for a long position here but I can't just go off the meter alone, I need my MA's to help me out.
2) The only other tool you need is to download an MTF MA MT4 indicator, you can do this manually by putting the moving averages straight on your chart yourself but as you will see shortly, it's much more easier to have them show up via an indicator.
(Download the indicator at the bottom of this post).
In the settings panel you want to make sure there is a 5 LWMA (Linear Weighted Moving Average) on each major time frame. Start with M30 then H1, H4 and D1.
So here we have M30 and the MA is period of 5. Scroll down and do the same for hour H1, H4 and D1 ie 60, 240 and 1440.
Once you have completed this, your indicator should appear as a bar at the bottom of the platform, and once all MA's are in the same direction the bar will light up BLUE for an uptrend and RED for a downtrend. If all of the MA's are not up or down, the bar will not light up.
Update: You need to make sure you're viewing this on the 30 minute time frame
The best thing about this indicator is that it uses price to cross the MA's instead of using another MA to make the cross, this way there is little or no lag at all.
3) It looks like the EUR is not only rallying up on the strength meter but it's also looking strong on all major time frames. As you can see below, everything is setup for a long entry. The MA's are up on all the major time frames. Time to put in a buy order with a 40 pip take profit and 20 pip stoploss.
Chart 1
After the order was entered, lets see what happened.
Chart 2
As you can see, price rallied up in a strong fashion, and this is exactly how you take every single trade.
Summary: -
It's entirely up to you on what money management techniques you use, but I do recommend not keeping your stop loss or take profits too tight. And remember, in this example trade, even after hitting a 40 pip take profit, so long as the MA's are still up and the Euro is stronger than the Pound, you could simply just enter another buy order. Just like what you could have done against the Yen earlier this month.
This strategy does come with losses, and that's why the 2:1 ratio is useful, also don't be greedy and make sure you take your profits without letting them run for too long.
In overview you don't always have to buy against a BLUE currency, you can buy against a yellow one as well. So long as you're going in the direction of the stronger currency ie the orange or red.
Indicator Download:-
