Who's Strong/Weak

Trading Discussion
1

Hi everyone.
I would like to start a thread. Who’s the strongest to the weakest. I keep many stats rating the top 8 currencies, USD/GBP/EUR/CHF/JPY/CAD/AUD/NZD. I have them rated, long term…(weekly charts), shorter term…(daily charts), and temporary (within the day). Their strength is based on the trends of one another. And I bought the app “strongweak” from fxcm. That helps a lot also.

So, let’s get one thing straight. I AM NO EXPERT. I am still a newbie. I only have one complete year under my belt now, on my journey in the financial markets. But, I can tell you that this fascinates me to no end how all the economies are related monetarily. You really need to be a genius to fully grasp how all the different markets are correlated to each other. There’s so many different variables to consider how one thing effects another, in the financial world.

Given all that, this is the reason why I’m starting this thread, TO LEARN FROM YOU SMART PEOPLE OUT THERE!
I don’t know much, but this is what I do know. You have equity markets, from each economy, there is the bond market also, commodity market, and of course the currency market, which seems to have the most impact from all the others.

This is how I trade, well the precursor to my trades anyway,…who’s dominating the market now. I have set up on my platform all 8 currencies paired to one another.

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It is just amazing to see how they all move simultaniously together. Yeah, these pairs are pretty much seperated into 2 groups. The commodity currencies, AUD/NZD/CAD. And the majors, USD,GBP,CHF,EUR. Japan, that one is unique to me, cause I see them siding with the commodities a lot, but surely not always.
I’ve learned that the EUR and CHF are so correlated to one another, in regards to the other ones. If the EUR is strong, well so is the CHF, and vise versa. EUR/USD and EUR/CHF are correlated very very much.
Ok, that’s all nice. Let’s talk about what’s been happening lately.

I’ll tell you who’s the strongest. GBP. Of course we all know that. We all know that the AUD is the weakest. But what I think is most interesting lately, starting this year so far, is the JPY. That’s all I’ve been reading about (analyis about what this year will look like) is how they are supposed to continue to be weak. Sure, it’s only the first month of the year, and we have much much more to go, but they have been making an imprint so far. Look at the weekly charts here.

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I have been tracking them long term and short term, definitely moving up the ladder. Talk about trends, they have been turning the corner with the majors, even NZD. Let’s see, what else did I notice this past week. Oh, the CHF finally came around and was up on all except the JPY. And guess what, so did EUR. But, the swiss out did the euro. The swissy haven’t been real strong this year yet, I guess they were due. Oh…let’s talk about the NZD. They have been showing strength, but I kind of think they are gonna turn the bend. Look, I’ve read about their fundamentals, like the strongest, except GBP of course. But, I kinda think they might go down. Probably because I see some PA signals on the weekly charts pointing that way. Oh, and what about AUD/NZD huh? When are they gonna turn and burn? (I loved hearing the 2 guys talk about them just the other day on another thread)

So, anyway…thanks for listening. I would LOVE to chat like this. BTW…I think I’m gonna be bias with the yen still taking out the others. Surely we need PA signals to confirm any trades.

I just want you to all know, that I’m a nobody, and not real smart, but have this unquenchable drive and desire to understand more and more about the interrealated currency world. Oh yeah,…I do want to make the money also. But, I figure the more I learn, the money shall come. But most of all, IT’S SO DOG GONE INTERESTING!!

Talk to me.

Mike

PS…Oh, can someone please exlain to me about “risk on, risk off” ? I have an idea, but have never learned in depth about it. I would like some good insight about that, cause a lot of analysts talk it.
Thanks.

2

interesting…you have done a great job…

3

Fxcm has an app called “strong / weak” that tallies up a single currencies movement over 4 different timeframes…I use it and it’s great for exactly what you’re trying to do here. Def check it out…

Risk on means that investors are willing to place trades on more riskier instruments such as equities and riskier currencies.
Risk off means investors are fearful and seek safe haven instruments such as the USD.

You can gauge risk by looking at risk trends such as the SP500, and yen crosses (because they are typically sensitive to risk)…also the volatility index and how the dollar is performing (fxcm usdollar index).

Understanding capital flows can improve strategies. But, just as any other aspect of trading…nothing is 100% guaranteed or even causal/correlated.

4

Hey Mike,
from one newbie to another (okay, I am a Junior Member, but still), this is a great thread!

I agree about the GBP!
I agree with Bigcheefer on risk trend definitions and the S&P500; you should follow the articles of John Kicklighter, Chief Strategist for DailyFX.com, who talks about these in his daily strategy and trading videos at length… Here is an older article he wrote (2012), which explains these terms quite well (even if the market direction info is of course dated now):

Risk Trends: Sentiment Holding Back S&P 500 and Dollar Breakouts | DailyFX

In terms of your diagrams, I notice that you used the Yen crosses mainly, but of course at the moment, at least in the past week, fear has swept the market, and the carry trade pairs have mostly reacted negatively, or at least have shown that they are at risk of deleveraging quickly from their vertiginous heights. Yes, the pound is strong, but perhaps it is stronger against the USD than, say, the Yen, so my point is that strength is all-dependant on the currency pairing rather than the currency per se. You do well to use the FXCM app (I do not, but I am sure it helps)… Good old FXCM!

Keep going!
Excellent stuff, and I hope others will find it useful!
Do you plan on updating it weekly, like Mauriforex on his market analysis thread on here?

Happy trading

5

Mike, I have deliberately selected two portions of your post that are most important to many people’s journey of learning.

The first is one reflects the many myths that pervade this business.

The second one suggests that you are sensing what it is that actually drives these markets, sometimes referred to in books as ‘fear and greed’.

The ‘market’ isn’t as big as many think, small sparks often start big fires, as this past week shows.

Some of the old traders talked about ‘dancing with the market’, there is a wisdom in this thought, when this happens you never look for tops or bottoms or reversals, I mean, to dance means harmony, going with the flow.

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Hi guys!
Thanks for dropping in!
Pipmehappy, thanks for that link. That was very insightful. I understand much more now. But soooooo much more to learn.
Peterma, I’m so glad you responded. Thanks for that.
I getting the hint to pay much more attention to other markets. Like the S&P 500, and the other equity markets indexes. Oh, and the volitility indexes also. I just want to see how they all “dance” together. (thanks peterma, that is good stuff)
I hope we can continue to talk about the market flows. I’ve learned that we will never be able to predict and know what’s gonna happen, but just finding an edge in the market to capitilize on it. I guess it could be said that either we are dancing with the market or fighting it. Winning in it or losing in it.
I do realize that there are a lot of daily write ups, fundamentally, and that’s what I always like to read. There’s no way I can think to make this thread like that. But, I definitely can tell you (through my daily stat taking) who’s strong to weak. I don’t know, maybe all of you kind of do that one way or another. I really think it helps to find SOME kind of edge that way.
Pipmehappy…you got me thinking a lot about your comment about strength being all dependant on the individual currencies.
Sure that’s true. But, I like to look at the big picture first, then come in. Putting things into perspective that way. I’m saying that the GBP is the strongest in total, compared to the others. After that fact, it would make sense to see who the pound has a bigger dominance over. That’s bringing in the microscope.
I always think about who is behind the movements of the currencies. I’ll show you a pic of the pound.

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As I watch the movement in real time, it’s unbelievable how they all move together. So, I know for a fact that the players are trading more than one trade at a time. It is across the board. I can see it down to the tick. So I know that that is some kind of edge. And I’ve tried trading basket of trades, but the problem there is all the spreads add up too much.
Anyway, I like to see the big picture first. Then, along with you, I do like to zoom in on the street level to see the particulars.

Let’s see what happens this week.

Mike

7

Hi all again.
Well, I’m doing my weekend analysis now, and not completely done. But, I would like to show you what I’m looking at and thinking. Any input would be appreciated. And of course any constructive criticism.
I’m looking at the CHF right now. Let’s see what they look like.

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I see last week they took out everyone (big weekly candles across the board), except to the JPY, which was pretty much unchanged. I’ve learned to watch the big candles. So, the question is will they continue on their roll this week? The CAD and AUD are at some pretty extreme levels, since 2011. To the others there is room to move.
I have marked down on my “weekend journal” just what I wrote here. Then I will watch them this week, along with the others. All just to get some kind of edge in the market, for a little profit. Trying to get consistency with my trading. That’s another subject.
Well, on to the next currency. I’ll post something else if I think deemed worthy.
Thanks for listening. Hope this is interesting for you out there.
If not, I can keep this stuff to myself.

Mike

8

Some FX traders also look to short term interest rates which will give them a ‘bias’, then data to enter the trade.

For example, one that can be looked at in relation to the Euro is “Eonia” - the one day euribor, or the rate that banks lend to each other.

In December it was rising as did the value of the Euro.

In recent days it has been rising when the Euro was not, some analysts were commenting on this BEFORE the rise in Euro this week, look at the date on this article as an example:

The ECB, Eonia, QE and the EUR

Rates can be had here:

Eonia - current rates and charts
Eonia interest rates 2013

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Wow. That’s interesting. Thanks!! I will be watching that. Bookmarked.
The factors that go into the movement of price is many.
Thanks Peterma!!

Mike

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A very good job indeed, it is quit unbelievable the way it is done. Wish all could have good things come their way in this manner.

11

Hello Mike!

Great job… So, how will you use this info? Will you trade and/or are you trading any Swiss-based pair? How is that going?

Let us know!

12

Hey PipMeHappy!
Appreciate the complement.
Look, I’m still trying to find my way, the perfect strategy. So, I couldn’t tell you now exactly how I go about trading, on demo of course now. But, I am finding that I most like to know who is stronger to the weaker. I don’t think I will ever give that up. So, yeah, the 2 hrs before work every morning I do scalp, learning and trying things. Then some days I will place a daily trade, with a take profit and stop loss to see what happens, before I go to work. I keep all records of the trades. After work I always keep track of the line up of currencies.
So, I’m still trying to find my way. I read as much as possible on here to find what can work for me given my schedule.
I’m a wanderer, in the trading strategy aspect of it, but also fascinated by the relationships of the world’s finances.
I do like hearing your story, going live. That will be me one day, hopefully sometime this year. Until then, I have to prove consistency with a strategy.

Mike

13

Hi guys.
Mike here with the summary of this past week of who’s strong to the weakest. (If you all haven’t noticed already)

This past week only: AUD on top, edging out USD by a little bit. Then GBP, JPY, CAD, CHF, NZD, and EUR the weakest.
The long and short of it all together: strongest on down,…GBP on top,(been on top) JPY moves up to second place, coming back from the dead, CHF in third, been there for a while, EUR fourth, not a real big change, NZD slipping to fifth, from a spike up to second but dropped back to their normal range, USD sixth, normal, CAD then AUD round out the bottom with no changes, given the big picture. Interesting how AUD can have a good week but still bring up the rear, showing how really weak they are in the long run.
The NZD was down on all. AUD was up on all. JPY was up on 5, down on AUD, even to USD. USD was up all, down only to AUD, even to JPY. EUR was down on all except NZD. CHF was down on all except EUR, NZD.

Maybe you all out there do something like this, so, sorry if this is no real breaking news. But, it does help me put them all into perspective. And we all know about hinde-site. Man, if I would have gone short the NZD, (I did think that they would fall), would of made some money. So, speaking of that, money would’ve been made whoever went short EUR/AUD. 360 pips.

I think I’m gonna develop a strategy going on the weekly charts. If I can ever not interfere during the week!! So very hard to let it run for some days. (sorry just thinking here)

Well, hope this is at least some good reading.
I’ll try to post my thoughts on what, who, looks good this coming week. Little bit later on this weekend. Actually I would want to hear from you all on who has the edge this coming week, on the strong/weak angle of the market.

Thanks for listening.

Mike
Ps. remember, I’m a newbie! I really don’t know much. So, teach me!

14

Hi Mike, lots of thoughts in one post!

Currently, I am trying to develop a mixed approach, with longer term trades (smaller size and wider targets) mixed in
with shorter term trades. You could do the same, if just having longer term trades did not suit your trading psychology but
you thought that it would be worth a try - that way, you are not missing out on either shorter or longer term trades.

Current thinking (and I take most of this from the videos published by John Kicklighter, Chief Strategist at DailyFX.com) seems to be that the present market, in terms of volatility, is at historic lows, and that to find clearer moves (with some exceptions) that we can trade with a higher degree of probability seems easier on smaller time frames, or at least more visible - say, an eight-hour chart… I hope I am not misrepresenting John Kicklighter’s thoughts, so please do not take my word for it and see his videos. Certainly, for traders who like to bring their trades to a close within a trading day, it is also good to look at weekly/monthly charts for an overall sense of direction, but as Ilya Spivak said at the end of 2013, even longer-term (or ‘swing’) traders must have the agility to act on what is happening in the smaller time frames, and react to that.

So, Mike, keep trying and finding a way of trading that suits your psychology, account size, risk tolerance, and lifestyle…

Thank you for your updates, which are very useful and you should keep posting.

Happy trading!

15

Wow…thanks Pip!
Good advice for sure.
I’m thinking now.
Weekly, daily, and even 8 hr charts. I haven’t looked at them yet (8hr). Will now.
Thanks!

16

Hi all.
I got something here. Tell me what you think.
Novel idea. Some PA here, coupled with STRONG/WEAK analysis. All on the weekly charts. I have 12 possibilities that I’m looking at this week.

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AUD/CHF. Nice retracement…if CHF is strong and AUD weak, then go short.
AUD/JPY. Nice pinbar…if JPY is strong and AUD weak, then go short.
AUD/NZD. If pair going up more, entering resistance area of 1.0916 - 1.0851 . If going past this area, go long.
EUR/AUD. 2 bar reversal. If EUR weak, AUD strong. Go short.
USD/JPY. Pin bar. If USD weak, JPY strong. Go short.
GBP/JPY. Pin bar. If GBP weak, JPY strong. Go short.

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NZD/CAD. Pin bars, (3). If NZD weak. CAD strong. Go short. No traffic ahead till .8800
GBP/CAD. Pin bars, (2). If GBP weak. CAD strong. Go short. No traffic ahead for 280 pips.
EUR/CHF. At bottom of range. If EUR weak. CHF strong. Go short. Room to move ahead.
USD/CHF. Nice retracement. Trending still. If USD weak. CHF strong. Go short.
GBP/USD. Breakout imminent. If GBP weak. USD strong. Go short. 1.6494 - 1.6411 range of opens and closes.
EUR/GBP. Major weekly support level approaching. Possible bounce up at .8150 If EUR strong and GBP weak.

What do you guys think?

Mike

21

Ok. Read it.
I guess your not a trader. We are. And this is how you do it. Technical analysis, fundamental analysis, experiencing the market flows first hand.
Sure, if you have $800 to spare. And I’m sure there’s no guarantee. There’s always risk trading the market.
Bottom line is …“we’re traders”. This is fun! And there is potentially big rewards figuring out the forex market. It’s that simple. We play the game to win. We also know the risks. To over come the many obstacles to becoming successful will be very very self fulfilling, to me. And a sense of accomplishment, gratification.
We’re traders. Economists, technical analysts, business entrepreneurs in the making.
If you don’t understand us, that’s ok. You can sit back and collect you money they make for you. It’s all good.
We just have a lot of work to do here. And it’s happening.
And it is just so fun!!!

Mike

22

Nice post Mike, you have him/her summed up big time.

I hope that the mods leave these posts as is - instant profits, easy money, money in you lap or whatever, pervade this business and they think that BP is full of cannon fodder to satisfy their insatiable marketing greed.

Mike has best answered, I’d say that we learn a lot from his reply.

23

Hi guys, Mike here.
Well, it’s monday morning here, just got to work, have some time to check things out here. So, like every morning, I spend 2 hrs looking at the charts at home before work. I have planned on a new strategy this weekend. (HOW I am going to place trades) And that will consist of trading longer term, preferencing 1 trade a week, but no more than 5. And all for the cause of being consistent with making 50 pips a week. Every week. That right there is the goal, basis, and the absolute bottom line with me in regards to my trading business. Demo of course, till proven successful, then live. Yes, I do plan on compounding, after every $200 made. But, all I’m concentrating on is being consistent making 50 a week. So, now I think I found a strategy (partly that is) to accomplish my goal.
Ok…whatever…that’s nice…
Back to the strong/weak strategy. This morning I found the GBP been week since the opening. And if you look above to the 12 possible’s I noted, I wrote about the GBP/USD to go short if weak/strong. And weekly TF looks to break out soon. So, yep, it sure looks like it this morning. I watched the 0930gmt news, and was a bit weak. So, I did jump in. “I’m gonna keep this one for the week!” …well, before I left for work after much contemplating I jumped out. Only took 18 pips. I got scared. Because it’s risky, they are the top dogs lately. Now I look at where they’re at, …wow. Oh well. I think it’s kind of dangerous with them going south not being at the computer all day long. “BOY IS IT HARD TO HANG ON TO A PAIR FOR A LONNNNNNNNGGG TIME, more than a day, let alone a few, for the week. But, that’s what I’m working on now.
So, I only have one going now. It’s the 'famous of late” AUD/NZD long. Looking for that to bring me to my goal. Then quit. Then start over next week. Oh, don’t worry. I will be playing around on another demo with scalping. That’s so much fun!!
But I will NOT do it on this real account. which is demo, but, in my mind it’s real

Thanks for listening.
Mike

24

Hello Mike, AUD/NZD is certainly making pips (made 23 pips this morning on this); have you watched my video? Post a comment on it if you have.
There is a thread on Forextown at the moment about trading part time, and most posters seem to agree that for people with full-time jobs who still want to trade currencies, it would be a case of trading either automated systems, or using entry orders (the ‘set and forget’ tactic), or trading baskets, and, on top of this, aiming for trading with longer time frames (weekly/monthly) or certainly holding trades for longer periods (maybe a few days).

I am using more of a mixed approach, and, certainly, I do check my mobile 'phone periodically during my work day, although how sustainable this may be in the long is a topic of debate within my own self; I still feel uncomfortable turning all my trading into long-term positions. To be fair, what is difficult to do for me is to set time aside to analyse my trading and keeping logs; I would like to use myFxbook, which provides statistics from your trading (e.g. average loss, average trade period, etc.), and I will need to find a way to link it to my Trading Station.

Do you use a web-based demo? I find that there is a lot of duplication of information, which does not help keeping track of one’s set-ups; e.g. for my mobile trading station, my web-based trading station (on my Chromebook) and my desktop trading station (on my Windows laptop) I have to replicate manually any drawn lines/Fibs, annotations, etc. - there is no way to sync them all.

Do you trade from the same computer all the time?