This thread will be a diagnosis of how each of the 8 currencies are relating to each other.
I know everyone has their own take on how they view the market. Whether you predominantly follow indicators, a specific pair, or just look out for a particular pattern to show itself, there are some things that take place in the market that are undeniable. And that’s what I plan on exploiting in here.
First off, this is where I am coming from. I like to see the market from big to small. Basically, I want to know what’s going on. Of course, you can know what’s going on even from different perspectives. Invariably, I have set some of my own fundamental boundaries, given the time frame span that I trade. Which would probably be between an intraday trader to a swing trader. It all depends on what’s going on.
But anyway, this thread is not going to be a signal service, or anything like that. I won’t even be announcing any of my trades. I want this thread to speak about what is going on in the market. This will all be purely objective. But… given these constraints.
- Monthly view-
There is a beginning and an ending. My view is this. I always find that change seems to take place around a turn of the month. Therefore, I find it best to keep track of the currencies on a monthly basis. And when you do that month after month, it will all be evident, of what’s going on.
I believe this is the best way to get as much information as possible out of all 8 currencies. I want to see how they are relating to each other, in the context of the month.
Let me first say, that this is in no way a substitute to that awesome thread Dennis runs. He comes from a different perspective than I do, that’s all. I love his thread and always check in from time to time. And what I will do is compare his stats to mine. But, there’s one thing that we both agree upon and that is… there is no better way to judge how the currencies’ are relating to each other than strong to weak. And that’s not even to say that stronger is better than weak, cause if you were a central banker (economically speaking anyway) you would want a weaker currency, especially in regards to your trade stats. Needless to say, all strong/weak is telling you is what’s been the trend. Which way is it going? And for how long? That’s all.
I’m old school. I want to know specifics, and exact numbers. I don’t know any other way to know how one currency is doing against another unless it’s expressed in a percentage. Surely not in pips. It’s the one thing they all have in common with each other. You will see a lot of percentages around, but, all that will mean is how much stronger or weaker they are. But don’t worry, I will be doing more simple explanations than just screen shots. Cause what’s most important is what all this data means, in simple terms.
As in the title of this thread, and the most important aspect to me, I want to know the condition of the entire currency. As it relates to every other currency, in total.
See, I used to think that all you have to do is look at which candle is the largest, between the 28 pairs, and you would find the strongest and invariably the weakest currencies. Well guess what? That’s not true. I have found instances of when it doesn’t line up like that.
And it makes sense. The only real way to find out who’s the strongest is simply to add up each of the 28 pairs %'s, against each other.
I wrote this down in my notes, because it was a real revelation. There’s a difference between the strongest and weakest pair…from the strongest and weakest currency.
If you think about that for a minute, it’s revealing. What I want to know is how the currency is fairing across the board. It’s kind of like I want to know what the consensus is from those who move the market. I just want to know. Money flowing into…well money!
Look. I know most traders trade a single pair, or two. I trade complete currencies. That’s why this is two fold bit of information. I only trade the strongest currency against the weakest currency. It’s a basket of trades that I do. 13 pairs (strongest against the other 7, and the weakest against the other 7…one is doubled).
Everyone will trade their own way, and this is not going to be a thread on how to trade these. What this will do is show you how the currencies progress throughout the month, how they will relate to each other, watching the trends, and seeing the changes occurring. We can talk about it. Throw in opinions. But, I will be most concerned with what the facts are, and we need to remember to be most objective about what’s taking place. Let me put it this way…whatever happens in the market, I will know about it. Maybe we can even correlate the fundamental drivers that make up the trends that take place (I’m one that pays attention to that stuff).
- Daily time frames.
I do have end of day only stats. I still fundamentally believe that the most accurate tell of a flow comes from end-of-day numbers. I never want to forget that. But…
I want to know what happens inside of a day. And, everyone should know by now, that you have to be aware of the three sessions that transpire within a day. So, you want to know what happened during the Asian session? I’ll be able to tell you.
I guess I should share when I divide up the sessions.
-5pm -This the end of the day. (I’m in the U.S.) Right now, that’ll be 11pm GMT. Or Zurich time.
-3am - This is 8 am London time. 9am GMT. London session start.
-8am - This is U.S. start. 1pm London time. 2pm GMT.
So, there are 3 times a day that I run these numbers. Basically I will be able to know what happened during each session. There’s nothing I can do about the overlap between London and the U.S. I will just know what London does during their morning time.
Ok. Well, this is a good start. I tried to give you as much information about this thread as possible. A lot more will follow. I will be spending a lot of time making these numbers all make sense to you.
Remember, it’s not so much about the numbers themselves. It’s what they mean. It’s putting them all into context. All we want to know is “what’s going on?”
Bear with me. I’ll get much more out there as we go along. I do want to give a heads up on how this month is playing out so far. We’re entering into the second week. So, I have some catch up to do here.