So going back to inter-market analysis. We have a top in bond prices. We also seem to have a top in place in the US Dollar. So now we expect the stock market to follow?
Hi Philip,
thanks for the heads up and discussing your experience. I would like to add that I do think it is right NOT to listen very often to the others. By no means do I want to change your strategy - just like Peter said it often enough.
I am just sharing my thoughts and we try to help each other here. So we all learn in the end.
I told you that I find this strategy very interesting however it is very very very difficult in my view to make money with it. You are in the very beginning of the test, it needs more sample data and fine tuning. I am still not so sure about it but time will tell how it works.
One thing on your calculation of making 10 pips profit. Do not forget to pay the spreads. If you also count that to the equation then the SL is even less than 100 pips so you get stopped out even earlier or if the spread is paid from the 10 pips gain then you come out with zero.
Do you trade it BTW on demo or live account?
One more comment, I think the combination seems quite tough with USD, CAD and EUR. Have you thought about going long EURNZD, NZDJPY as a hedge, and EURJPY? The first has a good probability to win and the other two is more like a BE trade. Do not do it, I just tried to come up with a combination how it is possible to come out better than +210 - 100 - 100 = 10. In my mind this combination is more of a winner, maybe it would be like this in the end: + 210 - 100 + 0 =110. My problem is timing, as I hold positions very long the exact timing is not that important. However in your strategy it is very crucial. EURNZD is a very volatile pair, if you get the timing wrong, you are out in a couple of hours.
Cheers,
FE
I thought that a multi week USD rally is about to come :59: Someone just shared his post about it last week 
Sorry Phil, sometimes I have to be easy going in this demanding business.
FE
Yeah, I still hold that thought on the dollar. I was talking about hat was the expectation for stock based on market analysis not technicals.
BTW, the dollar has been rallying for the past three weeks, letās see how this week ends.
The idea of Euro, Cad and Dollar as well as the 210:100 reward to risk are just examples to clarify the point. At the moment I want to buy GBPUSD and short EURUSD. Iām still long EURGBP for a profit of 15 pips or so. These are all live. My fxbook account is on the first post of my thread.
The interesting thing will be next week on USD, Fed Lacker may dissent, if he does then the same reaction that we had last year on GBP when there was dissent in the vote.
(hmmmā¦ the market soon realized a dissenting voice is not enough, it takes economic numbers to back up the hawks.)
Hereās something that I noticed the other day. Thereās an indicator in TradingView called Pair Strength. Itās pretty useful if you pay attention to the details. As far as I can tell, it uses the Relative Strength formula to plot the values of the indicator.
Hereās a recent example of the 1H chart of GBP/JPY
The green line is the total strength of the Pound, while the purple represents the JPY against all the major currencies (except for AUD and NZD). Now, what I look for is divergence. Itās quite straightforward actually. GBP/JPY makes lower lows while the total strength of the Pound increases and the Yen is getting weaker. That means that thereās a good chance for GBP/JPY to rally.
I already put CAD in the calculation and will do the same with NZD and AUD during the weekend. Opinions?
Note: If you check the down move before the rally, you see the GBP/JPY making higher highs while the GBP as a total is getting weaker while the value of the JPY increasing.
Sounds cool and would help with my hedge attempts. Thanks for sharing 
Hey guys.
This is interesting. Check it out. Our man Peter probably knows all about this stuff. I was thinking of you when I read it.
How to Understand the Yield Curve - The Experts - WSJ
Mike
Hi Mike,
Yeah, and here is another post on the yield curve which can be helpful:
And here are bond yields in action today - note the effect of the decreasing EZ deflation threat.
Bond yields up for first time since auction return - RTļæ½ News
I also like it. Do you know how they calculate the strength of the given currency?
There are countless ways to determine a currencyās strength. Do you want to know the calculation of the indicator featured in TradingView?
Yes, I know 3-4 different methods, that is why I thought you might share something new.
Well, I took a look into the code. It is simple, really. The author first made a calculation to come up with some raw numbers which he use with the relative strength formula.
[B]Calculation for EUR[/B] = (EURUSD + EURCHF + EURGBP + EURJPY + EURCAD + EURAUD + EURNZD) / 7
If EUR were a counter-currency, you would have to first subtract the close value for the pair from 100.
[B]Calculation[/B] = ((100-USDEUR) + (100-CHFEUR) + etc.
TradingView has an in-built Relative Strength formula which the author later used.
Ok, so it is basically exactly the same as what Mike shared us with earlier when he calculated the difference. Only he did it with percentages. Thanks for sharing!
Yeah BB, thatās pretty much the same as I calculate them. But, Iāve decided to have my numbers just totaled up, instead of divide by 7. In fact, I remember asking you guys if I should divide or add. So I did it the dividing way. But after doing that for so long it nagged at me. Since I take more stock in the comparisons of the currencies, I add them up. I think it gives me a more accurate picture than an average. The parameters are larger and I think I see a better picture that way than the average way. (sorry FE)
BUTā¦on the other hand, I do think I get a BETTER picture of strength to weakness by looking at the trends picture. As opposed to a pip count (which is what that calculation is really doing). Iām just looking at a bigger picture the trend way, than the movement way, thatās all.
I guess the difference of the two ways is how far out your looking at the field. I tend to want to see it from farther out.
So, to summarize it all. I do calculate strength both ways (logged). But, only pay attention to the trend determination method (I have detailed historical data on that).
Well, I got to get back to finishing out this weeks data. And as I have been progressing, I think things are getting interesting. (Hereās a little teaser for yaā¦the USD) Iāll come back this weekend and tell you what I think is going on. Oh, and give an update on my strategy results also.
Letās talk!
Mike
Donāt forget the Relative Strength formula. It works with the raw pip numbers.
Ok. Here we go. Letās see some numbers.
I opened 6 trades this week. 5 took profit (+500) /// 1 loss (-200)
Accountā +4.8% ///For the Month of June so far is +4.3% ///For this system in total (May,Jun) +22.2%
Well, I messed up this week. And Iām very upset with myself (due to the psychological aspect Iāve been working on). I put on 2 trades around an hour and a half before I had to go to work on Friday morning. It was with the EUR. EUR/NZD and EUR/AUD. So, Iām just reading something and keeping an eye on whatās going on. The EUR is just moving on up against those, like was up, in total, over 100 pips so quickly. Then the floor just dropped out. I then needed to know what was going on. I found the IMF talks was done, (basically the Grexit thing). This was all around 2hrs into London session. I mean there was a serious drop. So I was looking at around -60 to -70 pips in the hole. Fear set in. Iām thinking Iām gonna go to work and end up with a huge loss at the end of the day, and week. Meanwhile I was up pretty high for the week as it stood. So, I then jumped on out of those 2 trades. -65.7 pips . That was the only thing I had going anyway. You can see my account balance for the week is not that bad at all. Soā¦I really didnāt want to know whatever happened with the EUR. But of course I run the numbers. So, itās inevitable. This is what happened. I would have been sitting on a +25 pips, and -11 pips right now (would be still running). And when I learned that, I realized that I was gripped with fear at the time. Thatās what Iām trying to avoid. I should have just trusted my system. I should have not been watching the market, cause the way itās supposed to work is when I decide to put on a trade, thatās it, it will either take profit or get stopped out. That simple. So, I realize it now. Will learn from it. And move on. Of course that is the first time that scenario has happened (since Iāve been working on my psychological behavior, and this system).
And by the way, I did not enter those 2 trades into the above numbers, except for my account balance, cause that is the outcome of my account.
Ok. Thatās nice. I want to talk about something else I find interesting.
Iāve been keeping track of what will happen if I trade this way. Every pair that is trending high (on weekly time frame) at the open of the week, start. And there is a take profit of 100 pips, and stop loss of 200. The reason is to keep track of the results and compare them to my results, which I do the same but use discretion on when to get it and which ones. Just to see if my discretion is better than using the system that way.
Well, for the last 6 weeks MY results are: W/L = 38-9 /// +2069.2 pips /// That systemās results are:
W/L = 65 - 21 /// +2300 pips ///
So, up to this point it looks like I can win more with the system than on my discretion.
Oh, I did give you guys the numbers for that system for the month of April and May.
April = 27/19 -1100 pips
May = 41/13 +1400 pips
I just find all that so very interesting. Cause it would be so much easier for me to just open them up at the beginning of the week and let them go.
I guess I should go back and find out what caused the month of April to go so bad. I do have a feeling it all has to do with whether the trends are on track or not. Ok, by how much off are the trends veering. And is the field changing? Or are their new trends been taking place?
At least I can go back and do some backtesting. Iām always glad that I run these numbers, for any kind of testing I would want to do in the future.
Mike
I like your findings, keep them coming Mike!
Iām still having a hard time wrapping my head around the system. I want to use a similar approach in my FX trading (I opened an FX live account last week).
I donāt wish to copy your strategy though. It is suited for your needs.
About fear. It is no easy task to identify our own flaws, so I believe you should pat yourself on the back even though you did not follow the system this time. Make sure to learn the lesson, and keep stackinā the pips! 