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Money flows: Trading the strongest / weakest major currency cross

  • #201
  • Nov 18, 2016 12:38am Nov 18, 2016 12:38am
nice to see some activity here again

strip this concept down to it's most basic idea (ala inception- the movie). this concept identifies where the 'action' is.
after I find out where the action is, I then use other tools (my own style) to either trade the continuation (the train is still going) or fade it (the train has reached its stop).

redwed, nice to see you working on this idea. I smell an EA in the works
  • #202
  • Nov 24, 2016 6:46pm Nov 24, 2016 6:46pm
Quoting Pipalicious
{quote} Hi Redwed, yes i agree. NZD is stronger at least during the area between green/red line compared to the crosses you have shown. Its then a case of doing the mirror opposite to match the ideal candidate -> strong/weak // weak/strong. But we also have to be aware that trading it and seeing it in hindsight is very different. Because even though a move can start of powerful it can (and does) evolve into different conditions. A powerful initial move is not neccesarily indicative of a powerful continuation - multiple outcomes do and will continue...
We can't predict the future, but History tend to repeats by itself.

The major outlines are already here. But, there need to be refinements.

How to get the most out of this?

# You need to open maybe 4 charts (or more) of one currencies.
## USD, you need to open GBPUSD, USDJPY, EURUSD and AUDUSD. Pick the more popular ones. Some said that we should avoid CHF.

# Draw support & resistances areas at every single charts opened.
## Or you could use any pivot indicators to do them automatically.

If you see GBPUSD, EURUSD, AUDUSD trying to break support, USDJPY likely also going to break it resistance. That means that USD is dominating those Currencies.

Potential problem for this:

# We don't have much time to monitor all 4-7 pairs in one time. Let alone if you're trying to assess all 28 charts.
## It would be troublesome if the currency is quote in one pair, base in another pair. Let's say USD. USD is base ccy in USDJPY, while in EURUSD it is quote ccy.
### Only a few indicators able to read all 28 pairs. But, surely it took times to examining which indicators suits me (or you).
#### Not to forget, spread can kill your trade profits. But, looking it from the brightside - higher spread pairs actually have bigger ADR.

Potential solutions would be:
# build one index of each currency (using one single indicator). My thought is using swing line indicator.
## The indicator idea of buying/selling is good. But we need a way to eliminate noises. We will be victim if we on/off trades all times.
### Concentrate on one ready-made indicators and study them for a few weeks (or months).
#### Look for low spread broker. Especially for GBPJPY and others.
##### We need to change our mindset. Instead of chasing 100 pips/trade, it would be easier to lock in approx. 10 pips/trade. Look below.
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Above 2 screenshots are not mine. But it says a lot. I have one terrible habit. I would like to see all my trades become 30 pips in no time.

Quoting mntiwana
{quote} ==================================================================== Hi redwed i just read some of your recent posts here,thinking of is it possible to trade with weakest ver strongest,the problem came where we don't know,if the currency is still in strong position or decreasing its value once open trade. regards
Applying support and resistance would be one solution. Price will rest and take a nap sometimes at those area.
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(This screenshot is from my own)
  • #203
  • Nov 24, 2016 6:51pm Nov 24, 2016 6:51pm
Quoting econbizer
nice to see some activity here again strip this concept down to it's most basic idea (ala inception- the movie). this concept identifies where the 'action' is. after I find out where the action is, I then use other tools (my own style) to either trade the continuation (the train is still going) or fade it (the train has reached its stop). redwed, nice to see you working on this idea. I smell an EA in the works
You mentioned about MY movie! Remember when the guy was on the chair brought down into the bath tub? The scene was so boring if you don't really know what is happening in that moment? Imagine this, i have not seen inception before. One guy introduces me that particular scene (guy on chair falling into bath tub). I'll be saying "what the heck is this?". lol.

Post 202 concludes my problem, (and probably solutions). I hope so.

Any discussions, recommendations are truly appreciated.
  • #204
  • Nov 24, 2016 10:05pm Nov 24, 2016 10:05pm
One example that can be seen currently.

1. AUDJPY is pointing down. No indicator needed, we know that price heading down.
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2. AUDNZD also pointing down.
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3. AUDCAD also pointing down.
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We can conclude that AUD weakens at all 3 pairs above. But, we must anticipate the support/resistance coming down.

4. But AUDUSD is not going down. Probably USD also weakens.
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  • #205
  • Nov 27, 2016 1:57pm Nov 27, 2016 1:57pm
Quoting econbizer
this concept identifies where the 'action' is. ... then use other tools to either trade the continuation or fade it
Yes this is it essentially. Then you either 'focus on a particular cross' or 'bounce between different crosses'.

I tend to focus on one since i scalp a lot and only trade when system triggers. Why? Because if your system cannot filter signals then is no bueno.
Only then can you identify the quirks and resolve them providing the cost of opportunity relative to your 'edge' does not diminish.

Also to note that tick ratios between crosses are not constant and vary frequently (which can indicate interesting observations in behavior).
So as a 'random' take the GBPJPY vs all:
GBP/USD -> 1:0.6
GBP/AUD -> 1:1.2
....
JPY/USD -> 1:0.4
JPY/AUD -> 1:0.5
ETC...
  • #206
  • Dec 6, 2016 6:54am Dec 6, 2016 6:54am
Another 'suggestion' is using money flows as a means to evaluate what you can control.

Nobody knows what is going to happen next - once your trade is executed. There is no crystal ball or magic numbers.
Nobody profits - simultaneously - from all the infinite curve balls price will throw at you.

The best you can do is manage/babysit your position with the intent of the market unfolding into the scenarios 'your' system is designed to profit from.
With expectations of doing this consistently and recurringly - whilst dealing with all the punches and face plants that do and will happen

Lets face it, how many threads are there where trade management is discussed thoroughly? Its always about that perfect entry

What everybody can do and can control is entry, length of time, trade size and exit. The key being in that bit between your entry and exit.

When creating a limit as to how many crosses are involved in your system, you essentially come up with a theoretical zero sum, where the net +/- movements always equal 0.

- So why not use this to your advantage from a management (timing and trade size) point of view?
- Why not calibrate the size of your trades accordingly, based on this dynamic change occuring within the theoretical zero sum?

Just because [for example] all GBP crosses are 'strong' and all JPY crosses are 'weak' it does not mean a continuation of a move, because once again price will unfold however it wants to unfold - after your entry is executed.

So going back to my 'suggestion', use this as a means to asses the level of risk you are willing to accept as you enter the market, and manage your risk/exposure as these 'scenarios' shift around.

If price unfolds accordingly, you ramp up in gears.
If price unfolds unexpectedly, you ramp down in gears.

Because you will never see a race driver competing around a circuit in only one gear, they will use all 7 (8?) gears accordingly, as they manage the dangers that surround them, be it other cars, bends, straights, crashes.
The circuit itself is deterministic (i.e. price is only up or down), yet the risks involved are always changing.

As long as you can 'see' a couple feet in front of you, then the rest comes down to how well you manage them rolling present moments.
Using the crosses as a means to manage the position - moment to moment - is one way.

Inserted Video


PS: Just thought id share this because i like this thread, its just a shame it died a death.
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  • #207
  • Dec 6, 2016 7:18am Dec 6, 2016 7:18am
Quoting Pipalicious
Another 'suggestion' is using money flows as a means to evaluate what you can control. Nobody knows what is going to happen next - once your trade is executed. There is no crystal ball or magic numbers. Nobody profits - simultaneously - from all the infinite curve balls price will throw at you. The best you can do is manage/babysit your position with the intent of the market unfolding into the scenarios 'your' system is designed to profit from. With expectations of doing this consistently and recurringly - whilst dealing with all the punches and...


Stating the obvious, but I agree this thread needs life. Perhaps there is an improved/refined method/indicator to observe relative currency strength that is available now.

Nice vid!
HMSR
  • #208
  • Dec 7, 2016 12:42am Dec 7, 2016 12:42am
Hi all,great thread here,unfortunately unknown4x is not around anymore....i do like to ask,there were two sites that were talked about here where futures data can be gotten....however i have been using one.....when i checked the other today...i realized the futures value were very different....the two sites are finviz.com and forexticket.....i dolike to ask if anyone has compared the datas and found which is more reliable....thanks...anybody or evrybody please answer
  • #209
  • Dec 7, 2016 8:47am Dec 7, 2016 8:47am
carbonado, you can start with finviz. forexticket discloses how it computes its indexes on the same page as its currency index.

I explored building custom indexes based on historical trade weighted data as per unknown4x showed. while I do not know how finviz computes theirs, I found finviz ones to be sufficient for beginners. it may be just me, but I find simple line plot custom indexes r not useful. more programming work needs to be done for an edge in using these, such as plotting OHLC for these custom indexes & pivot points.


Pipalicious, you r obviously an advanced trader using ea. hope you will stick around to point us in the general direction. thusfar, I m trading using a discretional basis of the usual outer/inner trendlines, the usual single bar patterns, couped with a directional matrix of fx crosses for a birds eye view of what's trending. however, this is purely discretionary, and I can only trade when I sit infront of the charts. as you know, these strong flows happen only a couple of times everyday, something that an ea will fare much better at than us slow n lacking in patience humans. hope you will show us some general guidance. I m not a programmer by training, n it is a tad fustrating having so many ideas that I can only implement in a spreadsheet. feels like I m substituting a hammer for a power drill. I know that api is the way to go, but m clueless in this regard.

with your amount of scalping, you may fare better with fx eminis or the broker unknown4x used. no idea how it is faring now thou, since the guys behind betfair own it n got bought over by another bookmaker. regardless, the coding work required is way to advanced for a retail non programmer like me. it may save you much comm if it is still what unknown4x described it to be 3yrs ago.
  • #210
  • Dec 7, 2016 9:11am Dec 7, 2016 9:11am
re: Pipalicious, I find your suggestion of sizing relative to trend interesting. your analogy of a race driver switching gears really puts your idea into perspective *two thumbs up*

based on your quick n multiple entries, seems like your scalping style is really just riding when the flow is on, reducing when it slows. as a discretionary trader finding inmer trendlines for potential propulsion, I find myself carrying those ideas into trading flows. my search for confluence can be a tad conflicting to scalping quick flows. m I overthinking looking for confluence?
  • #211
  • Dec 7, 2016 12:37pm Dec 7, 2016 12:37pm
"
Quoting econbizer
carbonado, you can start with finviz. forexticket discloses how it computes its indexes on the same page as its currency index. I explored building custom indexes based on historical trade weighted data as per unknown4x showed. while I do not know how finviz computes theirs, I found finviz ones to be sufficient for beginners. it may be just me, but I find simple line plot custom indexes r not useful. more programming work needs to be done for an edge in using these, such as plotting OHLC for these custom indexes & pivot points. Pipalicious, you...
"
Thanks econbizer...i see huge merit in this method...though you would have dig deep......thanks once again....
  • #212
  • Dec 8, 2016 7:47am Dec 8, 2016 7:47am
I dont trade with ea, 100% manual.
I dont expect anyone to believe me nor look at me for advice -> question everything from everyone, including their intentions.
I dont want people to think i have 'the answer', because i dont. I also take huge hits and let me tell you, its painfull at times.

What im saying is that i am also on a path of discovery, a path of questioning both my self and everything around me as it has been given to us all.
And what are my intentions? -> to give and take.

Quoting econbizer
Im trading using a discretional basis....
The key to moving forward is by eliminating as much discretion as possible. How if not do you know if you are truly improving?

Quoting econbizer
these strong flows happen only a couple of times everyday, something that an ea will fare much better at than us slow n lacking in patience humans.
Flows happen continually all day long to varying degrees of strength/momentum. And you cannot build a career only by trading 'perfect moves' because eventually you will get caught in the rough. You must learn how to handle the 'smooth seas' with the rough and rocky -> the unexpected.

To continue with a driving analogy, its as if you will only drive your vehicle if there is no traffic or congestion on the roads.
Also, patience is a must, especially when it comes to not trading. There are only so many things we can actively control, and patience is a big part of it --> No patience = No bueno.

Quoting econbizer
custom indexes based on historical trade weighted data
"Also to note that tick ratios between crosses are not constant and vary frequently (which can indicate interesting observations in behavior)."

HTH
  • #213
  • Dec 8, 2016 3:02pm Dec 8, 2016 3:02pm
Quoting Pipalicious
"Also to note that tick ratios between crosses are not constant and vary frequently (which can indicate interesting observations in behavior)."
Pipalicious, do you measure tick ratios as a gauge for where the 'action' is? how do you measure them? by time.. min-by-min- cross A moved 1 pip in the last min, while cross B moved 5 pips?

I am thinking a simple matrix of crosses showing if prices closed higher or lower on this D1/H1/M15 timeframe, will already show where the 'action' is. this identified cross will also be where the tick ratio will be the highest across the pairs you are watching.

I find it amazing that your trades where manual. program trading may be a potential long-term solution for your scalping frequency. you can save much more with a lower comm broker. unknown4x was using lmax. I do not know if they r still a gd choice.
  • #214
  • Dec 9, 2016 1:54pm Dec 9, 2016 1:54pm
Quoting econbizer
{quote}tick ratios...
If you are to measure ticks (price) then ideally measuring price vs price is more appropriate, as opposed to price relative to time.
Ticks are not constant both in comparative terms nor in time.

Its 'a' form of tracking the influence of crosses relative to a host. Just because it is going up it doesnt mean its strengthening.
You see a 'setup' - or whatever - and look at the subparts, they are confirming aswell. But the ratio is 4:1 and the current 'setup' is at 2:1.
The influence on the host has diminished by half.

Its hard to explain so it may sound like gibberish and im sorry but i wont disclose much about this particular topic as im still working on it and its taking a lot of my time up.

As for ea's im not interested nor intend to go down that route. I enjoy trading (scalping) although it is monotonous and it keeps me on my toes learning 'mentally', i believe ea's feed the opposite behaviour although purely my opinion. As for comms. it doesnt concern me frankly as it is relative to the size of moves i capture (for example today it was approx. 5% of net). When i scale further - yes. For now, no.

The important thing to remember is that most 'crosses' are highly correlated to certain degrees and it is this (de)correlation that forms safer moves to capture.
  • #215
  • Dec 12, 2016 11:39pm Dec 12, 2016 11:39pm
Quoting Pipalicious
{quote} If you are to measure ticks (price) then ideally measuring price vs price is more appropriate, as opposed to price relative to time. Ticks are not constant both in comparative terms nor in time. Its 'a' form of tracking the influence of crosses relative to a host.
You are right. I don't understand what you mean. Conventionally, price is printed bar-by-bar by using time OR per number of trades (tick chart) as the base. Time is mostly used, since the fragmented business of spot fx makes tick data by single sources unreliable. Hopefully, you can elaborate, for purpose of meaningful discussion, after you find clarity in your work.
  • #216
  • Dec 13, 2016 1:18pm Dec 13, 2016 1:18pm
Quoting econbizer
{quote} You are right. I don't understand what you mean. Conventionally, price is printed bar-by-bar by using time OR per number of trades (tick chart) as the base. Time is mostly used, since the fragmented business of spot fx makes tick data by single sources unreliable. Hopefully, you can elaborate, for purpose of meaningful discussion, after you find clarity in your work.
First of all, you need to understand this is all my own view of the market as a whole - it may differ greatly with others observations, maybe even contradict.

You can use time - i never said it couldnt be done this way (ive attached a meaningful pic from a forum member here).
Time is just another measurement tool. You can use candles, renko, ticks, whatever. Each will inevitably have its pros and cons.

An increase (or decrease) in activity is in direct 'correlation' as to how much/little the parts influence the host (the currency cross).
You cannot compare your running skills with those of Usain Bolt's because you are both (literally) in different leagues.
Conversely, you cannot compare an 8tick move in gbpjpy with a 2tick move in gbpeur - over the same interval - because they are in different leagues.
So you need to first identify your running standards and those of Usain Bolts -> an 'iso' standard if you will.
How do you know if your running skills are improving? How do you know if Usain Bolts running skills are diminishing? You need a measurement that calibrates.

Random example:

Say there 'tends' to be a 3:1 ratio when you see a valid 'setup' succeed, and on this particular 'setup' you notice:

a) ratio increased to 5.1
b) ratio decreased to 1:1

What does this tell you? (other that the obvious 'change in influence')

Again, there is a difference between comparing:
- apples with oranges.
- apples with apples.
- granny smith apples with granny smith apples.

To truly know when quality and standards have increased (or dicreased) you cannot compare apples with oranges, nor apples with apples.

Make sense?
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  • #217
  • Dec 14, 2016 10:05am Dec 14, 2016 10:05am
Quoting Pipalicious
{quote} ...So as a 'random' take the GBPJPY vs all: GBP/USD -> 1:0.6 GBP/AUD -> 1:1.2 .... JPY/USD -> 1:0.4 JPY/AUD -> 1:0.5 ETC...
This leads to the question of identifying a proper basket of apple & apple & apple.. ... for comparison.
from the above eg, AUD registered 'larger' moves against USD. Does this imply AUD should be observed when trading GBPJPY, OR maybe this implies trading GBPAUD is better than GBPJPY.

This seems to hold similarities to my observations when scalping flows- a flow that started with eg. AUDJPY may be overtaken by a fresh flow into AUDCHF a few moments later. If I entered long on AUDJPY on a flow + valid setup & identified fresher flows into AUDCHF, I would then look at AUDCHF to determine if my long entry still has legs.. or is facing resist just above, in which case I will move my stop to breakeven OR cut my pos. I m thinking your style of using 'ratios' would be looking at this same scenario.
  • #218
  • Dec 14, 2016 2:34pm Dec 14, 2016 2:34pm
Quoting econbizer
{quote} This leads to the question of identifying a proper basket of apple & apple & apple.. ... for comparison. from the above eg, AUD registered 'larger' moves against USD. Does this imply AUD should be observed when trading GBPJPY, OR maybe this implies trading GBPAUD is better than GBPJPY. This seems to hold similarities to my observations when scalping flows- a flow that started with eg. AUDJPY may be overtaken by a fresh flow into AUDCHF a few moments later. If I entered long on AUDJPY on a flow + valid setup & identified fresher flows into...
Theres many different things that this information can be used for, but defining what it is you are looking for is just as important
-> what is the problem/obstacle and how can you solve it. And if it doesnt help, then: next...next...next...eliminate...eliminate...eliminate.

Like i said earlier on im not going to go into details with this subject but will merely say 'hey, you may find productive information in this particular topic'.
There is a lot of moving parts and this (for me at least) is just one of them.

- You can use it to simply trade the 'best' performing currency cross of all (28) of them -> irrelevant of indices and/or correlations.
- you can use it to design more responsive 'tools'.
- You can use it to manage your positions more efficiently.
- You can use it to normalize the whole spectrum to eliminate redundant data.
- etc.

But it all boils down to honestly defining what is the current road block encountered and what options are there to solve it.

And if there are no current options, then create them. For all you know, this topic may not truly help you but actually hinder your progress.

"...identify the quirks and resolve them providing the cost of opportunity relative to your 'edge' does not diminish"
  • #219
  • Dec 31, 2016 7:07am Dec 31, 2016 7:07am
Quoting redwed
{quote} ...We don't have much time to monitor all 4-7 pairs in one time. Let alone if you're trying to assess all 28 charts.
Hi redwed, one potential solution for monitoring all crosses is a matrix. see screenshot attached. I've adjusted my matrix to read-off vertically (orignal idea here: http://www.forexfactory.com/showthread.php?t=392932, matrix reads-off horizontally)

This thread is gold. I hope to generate more discussion here. I am currently translating my discretionary trades into a programmatic logic to build into an EA. The above matrix solves the problem of identifying 'where the action is'.

The harder issue that needs more thought is continuation OR fade? I am exploring pivots to determine my R:R and trade validity using pivots. I like Pipalicious' driving analogy for position sizing & am doing this via allotting points to conditions.

It is possible to trade of this matrix on a discretionary basis. What is hard is sitting in front of the screen for hours & not doing anything stupid until a flow happens.
Attached Image
  • #220
  • Jan 19, 2017 9:54am Jan 19, 2017 9:54am
Quoting econbizer
What is hard is sitting in front of the screen for hours & not doing anything stupid until a flow happens. {image}
About that indicator, google tsd. I requested for alert version for it, but it was turned down by him.

You can minimize your scope. For example: instead of trying to tackle all 28 - master 3 of them.

Use this calculation:
I use only 3 currencies (for example).

3 times 2 (3-1) divide by 2 = 3 pairs.

4 times 3 (4-1) divide by 2 = 6 pairs.

It is as simple as that.

If you're trying to 'learn' AUD, JPY and USD, there is only 3 pairs to concentrate: AUDJPY, AUDUSD, USDJPY. If you tackle it properly, it's not essential to see all 7 pairs of aud, all 7 pairs of usd and all 7 pairs of jpy.

One example would be - AUDJPY is sell = AUD Weak, JPY Strong. Jot them down. Look at another chart. USDJPY buy = USD strong, JPY weak. AUDUSD sell = AUD Weak, USD Strong.

AUD weak at 2 different pair. USD strong at 2 different pair. That means JPY is no good right now. Avoid JPY at all cost.

Pretty simple, don't waste too much energy watching all 28. Get a healthy routine with 3/6 pairs first.

Use some pretty decent indicator to show trend. Whatever it might be. Whenever something changed, look over to another pair. There might be some clue here and then.
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