Currency Strength is one of the most important indicators in trading. It has a “predictive” nature if combined with momentum and volume. A common mistake in creatring such indie is to calculate ALL 28 currency pairs. This add “noise” to the indie end result. Example: EURUSD & GBPUSD reflects the accurate price of EURGBP synthetic pair, so why calculate it separetly? mis-pricing (which quickly correct itself) of that pair will add “noise” to the end result. Another point in the creation of such indie is the relative market share of each currency. NZD “movement” does not have the same effect as USD “movement” of the same size. G.
Hm, this is very interesting G. So, we just need calculate 7 major pairs (8 currency) ? Any clue on: Momentum, Volume ? Is it using the standard MT4 indicators of : Momentum & Volume indicator ? How about: market share ? Thanks
1. Market Share: You can find “market share” here (look for table titled “Most traded currencies by value”): http://en.wikipedia.org/wiki/Foreign_exchange_market Note that you have to divide the number by 2, since it totals 200%. 2. Momentum: I keep track with my “standard” Currencies indie AND “momentum” calculated one. The first is a simple T-T1 and the second is the diff in momentum. Momentum diff is calculated by Momentum(13) MA(3). 3. Volume: using my own TickVolume indie. G.
Thanks G. For market share, we must take the value proportionally , by comparing each currency
with the Sum of that 8 currencies ? Or, how to apply it ?