Complete Currency Dynamics

[anon76360754]

I just wanted to give a heads up on something.

I’m not all that new to the whole running of the numbers, strong/weak diagnosis thing. This is how I started out, in 2013. But, '14 - '16 were my strongest years of data collecting. And given that I was old school, I kept it all on paper work (nothing like the good 'ol paper and pencil). Then I transitioned to excel (maybe in '16). But, can’t, and will not, get rid of my old work. So, I took some pictures of some of the stuff that I’ve done back then. Take a look.

I love this - reminds me of the days when I started out too, the data was just immense with the end goal of finding common denominators so that [finally] the amount of input starts to slowly reduce and you focus on “what really matters”. It’s tough finding an edge here, but i’m sure the above approach you took certainly opened your eyes to far more than just what you were intending to focus on - a priceless lesson, and one that I’d advise anyone to do if they are new to this game.

You learn far more when trying to find the answer to a question than being told the answer straight away

[MikeWolski]

Thanks Bacon!
It’s nice to see someone else understanding where I came from (coming from).

Appreciate that.

[MikeWolski]

End of day results.

Well, today went to the GBP. +2.19%
That’s 2 days in a row.

The JPY was the weakest. -2.35%
They are dropping pretty consistently, looks like. Well, the Asian session kicked all that off.

So, what do we got. From the top. The EUR slowly climbed for the first 2 sessions, but dropped a good bit. Thanks to Mario. But, in the biggest picture, they are the most bought currency, for the month.

Next is the CHF. Climbed, then dropped. See how important it is to see the end of day numbers? That’ll always stand true. (Can be frustrating though)

The Dollar dropped like a rock today, but before it was all over, bam, right about where they were. Actually a tad bit higher. Well they hold the 3rd and final positive currencies.

NZD. Climbed up some, but dropped right back down to about where they started.

CAD. 2 sessions of dropping, only to come right back on up to where they started the day.

AUD. Took the first session, actually the strongest then, but corrected a good bit. But, they didn’t go all the way to where they started. Still, dead last. By a lot.

Oh, I forgot, the GBP. Well, we all know why they have been climbing. About one whole percent every session. Impressive. And noteworthy about that, it’s because they had a monster of a day yesterday. So, yeah, impressive.

Well, we have one more day left. The only real change has been the Pound. Man, look, they were down to -11.84% going into Asia on Wednesday. That’s a pretty good run so far. But, don’t forget, if they get above the mid line, then I’ll be impressed.

We shall see.

BTW…I read the speech today from the Swiss National Bank guy (Jordan). He definitely said, a few times, of how they are intervening in the forex market. He believes the Swiss is way overvalued. They don’t like that.
Something to keep in mind, that’s all.

Alright, see ya in the am. Bright and early.

Mike

[MikeWolski]

Morning.
What happened overnight?

The EUR took over the top spot. Finally. I mean, if they are on top, they should be strong, right?

The NZD brought up the rear.

This is what I find interesting. Looks like Majors vs. Comms. With the exception of the CAD. Well, that’s how I see how that played out. Comms dropping. Just look at the colors, reddish ones on bottom.

So, that boosted up the strong weak pair quite a bit.

Btw…if anyone is interested in seeing that bottom table in full, just let me know. There’s 28 pairs on down there. All in order.
It would show you the order of the strongest strongweak matchup.

See ya later.

Mike

[clemmo]

Mike,
Does doing things this way give you an edge over simply looking at a heatmap or a performance chart? Thanks for letting us know about Barchart, it looks to have a lot of data, some of it may be useful.

[MikeWolski]

Hey Clemmo…

Sure does. Anything to look back on and find some kind of flow always helps. That’s why I have picked a monthly flow. Just month after month helps put all things into perspective.

Speaking of that, time to run the numbers now.

Mike

[MikeWolski]

The latest.

Well, thanks to Clemmo here, this gives me an opportunity to talk about why I do what I do, as opposed to just looking at a heat map. Oh, don’t get me wrong about that, I love heat maps. But the problem is, it’s only giving you the snap shot of the moment. But, we need to also know what’s been happening in the market, what’s going on now, and are there any patterns taking place. Like the strongest, weakest, by how much, and surely how they are relating to each other as time is passing by. Think about it. You get all the information you need if you were in a helicopter, seeing the big picture first, then when you come in closer, get more and more details that end up painting a more clearer picture.

So, today, what do we know? The EUR started out quite strong, but during just one session (well, London’s morning part), completely flipped. That can simply tell you that they are weak. But, actually, in the context of the month, they are not weak. They are the strongest. Those numbers are the monthly running total %'s. Now, you can say that the CAD is strong. Yeah, but just for this little bit of time, because they spiked up 2.23% since London opened.

But, you have to remember, the day hasn’t ended yet. It all actually doesn’t mean as much as what the end of day numbers will show. Even moreso, there’s so much more of a perspective to gain. See, there’s so many pieces of the puzzle to consider. The best we can do is watch, follow, and take an opportunity.

Who’s to say we can’t get a glimpse of where the money wants to go? It has all been imprinted!! Why not??!!

We just have to be smart about it. And think.

Talk to me.

Mike

[MikeWolski]

Let’s talk about perspective.

During each of the 3 sessions, there are different dynamics going on. When the Asians are up and at work, you will be seeing a lot of money pouring into their favorite currencies. We’re talking about the AUD, NZD, JPY. Well, China has a big affect on those ones, moreso.
Then when London wakes up and trades, there’s no wonder why the Pound goes crazy, one way or the other. Man, you just got to know that those Brits love trading the Pound. How do I know this? Cause I keep track.
The same goes for the EUR, and CHF. Those are the hot ones during their respective session. Then the USD, CAD, when they wake up.
Look…they all don’t get traded equally when their sessions are up and running. It’s because of the big banks moving their money. I’m sure we don’t know all of the reasons. Don’t forget about the fact that the Forex Market is not all about speculation. The big companies have to hedge, and also just switch over the money they get because of their products (big trade enterprises). Their people need paid and they need their home currency for that.

My point is, you have to keep the perspective of what time it is to what a specific currency does. That’s why, at the end of the day, everyone will have gotten their chance to do what they want. And all we want to do is follow and see where the bulk of a trend is heading. Is a currency in more demand? Less?

Humans are creatures of habit.
Humans are also greedy.

Let’s just try to follow the big fish, stay close, and not get eaten.

Mike

[MikeWolski]

How about a little more perspective (I’ve been wanting to do this).

This will look a bit crazy, but you can’t be here to see my screen to get the full affect. But, this is what November looked like, zoomed out. My bottom table, which shows the complete strong to weak match up of the currencies in order. So, those at the top would be the most promising match ups. Just look at the colors.

NZD is the darker reddish color, at the top. Then the AUD is just red. Blue is the Pound. Yellow is the EUR. Now, the more colored squares there are, that means they have more of the market. So, it isn’t surprising that as the month progressed the more the NZD got stronger. And the AUD was pretty much next in line.

Now, let’s look at this month so far. We can see that the reddish ones started breaking up, it’s because they got much weaker.

Remember, I start over each month, so they all start from 0. It’s not a continuation.

If anything, we know that the AUD has dropped off the map. And that would have been a good currency to short. That is undeniable. I guess we had a problem with the strong side of it. As opposed to last month, with the NZD. That was the dominant theme.

It’s just trying to put it in a perspective, that’s all.

Mike

P.S. Always remember this. Hindsight is 20/20. I will never think and say that we should’ve done this or that. Because as you go along, we really don’t know what’s going to happen next. We can, though, put probabilities to things that might happen, due to history.

[MikeWolski]

And that’s a week.

Well, it sure was a JPY session. Domination. So much that they took the entire day, in total, being up 4.49% aggregate.
The NZD lost the day, being down 3.87% aggregate.

So, you see the numbers there.
For the month running so far, the EUR/AUD is the largest spread, being 21.19% of a difference. I don’t know why I put those numbers there on the bottom as %'s. So, don’t take that seriously. Just know that if you subtract the difference between the EUR (8.67%) & AUD ( -12.52%) that will be 21.19% in-between.

But, this is something new that I found today. Check out the running totals for them so far this month.

Now, look at the total currencies’ total (not the individual pairs). The EUR averaged 0.28% for a daily total. Which is higher than any other currency. So that does explain why they are the strongest currency this month. That’s a daily total mind you.
The weakest average daily total goes to the AUD with -0.33%. And yep, that should explain why they are the weakest. I just find that interesting, and another avenue to see who’s up and down.

You can see the individual pairs there also. And again, that table is the daily end results. That’s what took place so far this month. I don’t think you want me to expand out and see every pairs’ ending results. At least you can get the averages, along with the minimum and maximum values that happened this month so far.

Ok.
It’s the weekend.

Mike

P.S. - If anyone wants to talk market, feel free. I’ll make it worth a discussion.

[clemmo]

Mike,
I like this econometric approach to analyzing the markets rather than just looking at chart data. Thanks for sharing!

I’ll apologize ahead of time for bombarding you with questions or if I say anything that might come across as skeptical - it’s not my intention but after years of experience I’ve learned to treat every newly introduced concept with caution.

Will you use this data to select issues to trade and then use some other method to plan a trade? Are you able to use this data to make any falsifiable statements about the future or is it more of a ‘snapshot’? For example one chart you posted this morning showed that NZDJPY is a likely combo but the big bearish move that made NZDJPY the big daily mover had already happened. Would your experience tell you that it’s likely to continue declining? It looks that way to me on a daily chart.

When I look at your tables my eyes go cross-eyed as I feel like I’m being ‘overloaded’ with data, but I’m also unfamiliar with your methods so that’s to be expected I guess. How do you decide what is worth your focus?

Thanks for spending time with us and enjoy your weekend.

[MikeWolski]

Hey Clemmo…
I seriously appreciate these questions. Let me see if I can answer them (quiet hard I might say).

Let me take this slow.

I like this econometric approach to analyzing the markets rather than just looking at chart data.

Well Clem…I’m glad you think so. Thank you. Also I’m glad to know that I’m dealing here with someone that’s been around for some years. But, in my mind, I don’t think there’s a smarter way of going about it. I mean, fundamentally, if you want to know what’s going on in the grand scheme of things, uhhh…what other way is there? Like, keeping track of where these currencies come and go from seems to be the only way. Right? I guess that’s just how my mind operates. What’s the big picture, first, then come on in closer.

• it’s not my intention but after years of experience I’ve learned to treat every newly introduced concept with caution.

Well, maybe it’s just me, but I know of no other way. It’s just interesting to know that you think that this is a newly introduced concept. I mean, you’ve seen a snip-it a the paper work I used to do. I’ve always have just kept track. Number wise, that’s all.

But, I don’t think it’s all that original. I mean, I hate to say it, but this looks like a carbon copy of what Dennis’ thread is. It’s simply just strong to weak comparison. I’m at more of a ground level than he is. All I know is that he is a genius. And when I learned of what he was doing (for a much longer time than I) I knew then that I was doing something right…and also that I started out on the right foot. See, numbers are my thing. My Dad spent over 50 years running his own numbers thing game. Needless to say, it’s in the (Wolski) blood.

Ok. That’s all good and nice. My only point there is that I don’t prefer any other method than this. And I actually despise doing what other people are doing. We have all learned that we need to figure out our own way of viewing the market. Look. I do know that everybody prefers to look at support and resistance levels. I understand price action. I’m aware of the pattern type traders. I’ve tried many indicators. But, when you step back and see all that, everybody is simply just looking at one single chart, right? I mean, that is how everyone is approaching their trading. They do say that newbies should stick with one pair, get real good at it, know it’s ins and outs. Then branch out from there.

I’ve been down that road. In fact, my mentor taught me that. Was call the ‘anchor trade’. Believe me, I tried. But, after so long, I just had to find my own way. And guess what? He even told me that very thing. Because he said that if there was one thing that he would’ve done differently starting out, it would be to find his very own way. Not anyone else’s.

And that’s all that I’m doing here. This thread is not about trading. I guess you can call it the prerequisite of trading. As my mentor taught me, you need your pre-trading strategy, and post trading strategy along with your trading strategy. You know, it’s the lead up, and the reasons of why you will place a trade.

Will you use this data to select issues to trade and then use some other method to plan a trade?

I’ve steered clear about divulging on exactly how I trade, other than that I trade the strongest against the weakest. Well, guess what? All that data is there for the biggest reason of knowing who’s on top, and who’s on the bottom. I believe in trends. And I believe in change. Actually, I believe that if it’s not trending, then it’s changing. Well, all that nonsense that I throw up there should be saying something. Either someone is trending, or someone is changing from a trend. Right?

Well, I would like to know if you read this thread from the beginning. Cause I tried my hardest to explain as much as I could.

When I look at your tables my eyes go cross-eyed as I feel like I’m being ‘overloaded’ with data, but I’m also unfamiliar with your methods so that’s to be expected I guess. How do you decide what is worth your focus?

My only focus is to be most objective. Find out how much a complete currency is moving, % wise. On a session by session basis. And on a daily basis. That is all.

And the more it’s all put into perspective, as the days and weeks, and months go by, well, I believe the more we should have a sense of where the money wants to go. That’s all.

Man, buddy, I got to go.
Momma’s calling.

Look. I appreciate very much your questions.
Let’s continue this, huh?

Thank you!

Mike

[mattszczerbinski]

Hi Mike - I’m pretty new to trading but wanted to know how do you calculate the strong/ weak percentages if you don’t mind me asking. I’ve been readind Dennis’s thread and I know he’s got a formula - am curious if yours if fairly similar.
Many thanks and look forward to see more of your posts

[Hunnybee]

Hi Mike,
I think you’ve got a nice methodical approach, which has appeal. But firstly I Don;t understand how you calculate the percentages. If a currency move a certain distance in price in a day, that is compared to what to generate a percentage move? I Don;t get the basis for your calculations.
Can you help me out?
Thanks,
Honeybee

[midwest]

Mike this is simply great, thank you very much for starting this thread up!

BTW I use Barchart.com every day… more than once::))

[clemmo]

Thanks Mike,

I actually despise doing what other people are doing.

I do too, which is why this data-driven approach (which is not common in retail trading forums) is refreshing. Although I think it’s possible to know a lot about what’s happening from a chart, you’re right that it’s only the story of one pair and is a bit like having tunnel vision.

find his very own way. Not anyone else’s.

Solid advice.

I have read the whole thread and will continue to follow it although I can’t promise I’ll stop interrupting.

[TheChiefBaboon]

Awesome work!!! Would be great of you could share your worksheet on google drive for us to peruse through?

[MikeWolski]

Hey folks…thanks for the interest.
This should clear things up a bit. I will give you a walk through of how I come up with these numbers. Remember, this is what I am doing…finding out how much one complete currency is up/down against all of the other complete currencies. We have 8 currencies here. Since there are 8 of them, then one of them will be against the other 7, right? That’s 7 total pairs. So, I just add those 7 pairs up, and that will be the total for that one currency.

Ok. Here we go.

The first thing I do (when the time comes), is hit the download button. Look.

Top right, just below the “New Watchlist” button. That imports the complete list that I have here to an excel spreadsheet. This list is in a specific order. And I really only pay attention to the “%Chg” column. What I do, then, is copy and paste chunks of this data and transfer over it to my very own already set up big excel sheet.

See, you will see that my list and the one in Barchart is exactly the same. For instance, EUR/USD is the first pair. GBP/USD is the second pair. And so on. But, notice how the first currency is the USD. Well, remember I said that each currency will have 7 pairs? Well, the total for each pair will be in the last row going across. And highlighted, in their respected colors. Now look closely up there. Above the green part, above like ‘Day 1, Day 2’. That shows the formula already in place, that will make the calculation. (I’m showing you what my next move will be. Which will be on Day 17th of December) My cursor highlighted ‘Day 17’, and will be for the USD total (grey bar going across). And once the numbers get in there (there is none yet, right) then it will add up all of the USD pairs. That will tell me how much the USD will be against all of the others. Look closely at the formula. The first one is -CI12. That corresponds to the EUR/USD. But, since the USD is the quote currency then it has to be the negative, right? That’s why it starts out as a negative. Because I want to know about the USD, not the EUR. Now, in the formula, when you move on down to the USD/CHF the USD is the base currency, so that will be added straight up. No inversion necessary.

Anyway, trust me, what ends up going into that colored row will be the total % of how much the USD has traveled aggregately against all of the other ones combined.

This one I highlighted the EUR daily total box. Look at the formula. First off, since every EUR pair will be the EUR as the base currency, I don’t have to have any -'s, or inversions to the calculation, right? That will simply add up the EUR/USD (CI 12, and then the group of EUR’s all together there, 20 - 25 rows).

Here will be the GBP total. Look at the formula. All it’s doing is adding up the GBP/USD above, then the inversion of the EUR/GBP (since it’s the quote currency), and then the straight up group of 5 GBP’s. That will give me a total of how the GBP did against all of the others. Get it?

Same thing here with the CHF. If you look up at the formula, that will tell you what excel is adding up. Which will be all of the above CHF’s pairs.

That right there is the JPY. You should know that the JPY is the quote currency in all of their pairs. So look, at the formula, there’s 7 things it’s going to add up, but also in the inversion state. The all have a minus of a figure. See, that will tell me exactly what they did.
Now, if you want to know what’s below that, that table is simply the daily end totals. Nothing else. In order. Now, on my excel screen, just below that is where I keep that eye sore of a session by session table. I mean, it’s the same thing as that daily table, but just keeping track of the monthly running totals at the end of each session. That’s all.

This is zoomed out, on my screen. But, that’s the month running so far. That daily total running part is not correlated to the part below, column wise. I sometimes have to physically move the ‘session’ part over so that I’m not traveling such a far distance as the month progresses.

Anyway.

Let’s see. Again. That black row going across, towards the bottom, is something I explained in an earlier post. Basically, it just tells me about the flow, of that particular session. Whether the complete aggregate went with the flow, or against the flow. And then right underneath that, is telling me who was the most dominant currency during that session (positive number, and is expressed in a %). And under that is the currency that was the weakest during that session (negative figure, which also is the %). Color coordinated. But then, at the end of the day, which is the 2 most bottom boxs there, that tells me who took the day in total. First the strongest, and it’s %, and the weakest, it’s %.

See, it’s information, to know who took that particular day. Strongest. Weakest. But, I’m mostly concerned with the monthly running totals also. See, how there’s 2 perspectives there? Oh, and also, more importantly, how they ALL are relating to each other. You know, I’ve been thinking, I just might start calling these, instead of strong vs. the weak, to most in demand, to least in demand. Cause in actuality, that’s what’s really meant by the numbers.

Remember when I said that it’s not the numbers of what’s most important, it’s what they mean, that’s most important. Well, I feel that the greater the %, the more in demand it is. Right? And likewise the opposite.

It really is all about relationships. And since this whole trading security is really 2 securities head to head, as one security, I think this is the best way to go about it. See, we’re not trading just one security like Oil. Or and interest rate. Or a company. Even in the futures market, (or an ETF) the currencies are paired to the USD. If you see the AUD futures. Well, all that really is, is the AUD/USD. See? It’s paired.

Bottom line is that trading currencies means taking 2 major securities into account. And well, all this nonsense that I’m doing is just simply breaking down them into individual securities. Looking at them as a whole. Comparing them. Then…go from there. Like whatever method of trading you want to do.

Ok. I’ll be back later on today. In a couple hours. Will have way much more time to explain some more.

Mike

[tommor]

Well done Mike.

Now take a break.

[MikeWolski]

Hey Hunnybee…
If you have any other questions, shoot.
I’m here for ya.

Mike