TAPPING PROFITS WITH AN INTRADAY STRATEGY
“As traders, we should never stop learning, because the
markets are never going to stop teaching.
Continuing to learn is a vital part of becoming a better trader.” – Track ‘n Trade
You may have heard that FX trading is all about combining
strong currencies with weak currencies. Well, this is the home truth. In fact,
this is what currency trading is all about, and the Currency Strength Meter
helps us do this as easily as possible, while you are adequately rewarded.
Currency Strength
Meter – What You Need to Know
The currency strength meter at LiveCharts gives you a quick
visual guide to which currencies are currently strong, and which ones are weak.
The meter measures the strength of all Forex cross pairs and applies
calculations on them to determine the overall strength for each individual
currency.
How Does The
Currency Strength Meter Work?
The meter takes readings from every Forex pair over the last
24 hours, and applies calculations to each. It then bundles together each the
associated pairs to an individual currency (eg, EURUSD, EURJPY, EURGBP etc) and
finds the current strength.
How Can This Help
Me?
It is useful as a quick guide to which currencies you might
want to trade, and which might be worth staying away from. For instance, if a
certain currency is very strong, and another suddenly turns weaker, you may
find a trading opportunity. Such deviation between pairs usually indicates
momentum. Conversely, if two currencies are weak, strong or average strength,
there is often a range or sideways movement happening. You might want to stay
away from trading those pairs. (Source: LiveCharts)
Bringing It
Together
There are many ways in which currency strength information
is displayed (like figures display, bars displays, etc.), but LiveCharts makes
uses of rectangular bars.
The strongest currency would display six rectangular bars on
top of it.
The weakest currency would display only one rectangular bar
on top of it.
The second strongest currency would display five rectangular
bars on top of it.
The second weakest currency would display two rectangular
bars on top of it.
The uppermost rectangular bar on top of the strongest
currency is green, while the only rectangular bar above the weakest currency is
red.
Looking at the CSM, the best thing to do is to combine the
strongest currency with the weakest currency for the best result. Sometimes, we
may combine the strongest currency with the second weakest currency (or the
second strongest currency to the weakest currency).
In a given day, all currencies with four or three bars on
top of them would be avoided.
Also, these are what we do not want to do:
Combination of one strongest currency with another strongest
currency,
Combination of the weakest currency with another weakest
currency,
Combination of one second strongest currency with another
second strongest currency,
And combination of one second weakest currency with another
second weakest currency.
Strategy Snapshot*
Strategy name:
Strategy type:
Suitability:
Time horizon:
Indicator:
Setup:
Position sizing:
Stop loss:
Take profit:
Risk per trade:
Risk-to-reward ratio:
Maximum duration per trade:
Maximum orders per day:
The quote below ends the article:
“When I follow my rules, good things happen. When I don't
follow them, bad things happen.” - James Altucher