To survived the pullbacks in our EURAUD* trade you would have needed a stop outside of 121 pips, those who have followed this thread for a while know I favor wide stops so 121 is nothing
Note: the US government is determined to save the stock market through an unprecedented central bank manipulation, that normally would be good news for AUD and looking at a chart of AUDUSD we can see AUD has a lot of room to the upside without breaking it’s multi-year downtrend
I pulled these number 1 hr early of the daily close, AUDCHF joins EURAUD as a current Top Trade, both have room to run
Trends are still working for us both current Top Trades posted small gains today with Top Trade EURAUD* crossing the +500 pip mark
Hi Dennis,
I don’t know if this has been asked before, but when calculating your ratings, why don’t you divide the difference (price - SMA) by the SMA instead of dividing by price?
As I’m used to calculate ratios in my work, it seems to me there might be a thinking mistake in the way you calculate your rankings. Of course not a problematic mistake, as I see you have been profitable for many years, but still a mistake. Let me explain.
As I understood it, the percentage values that make up your rankings are supposed to express how far away price is from its SMA.
Let’s consider a simple example. Suppose the value of SMA is 100.
Imagine price is 110. If you divide the difference (10) by the SMA (100), you get +10%.
Now imagine the opposite : price is 90. Dividing the difference (-10) by the SMA (100), get’s you -10%.
But when you divide by price, the results are strange. Look :
Price : 110, SMA : 100, Difference : 10
10 / 110 = +9,09%
Price : 90, SMA : 100, Difference : -10
-10 / 90 = -11,11%
The same difference in pips, is giving you different percentage values depending whether price is above or below the SMA!
Or is there something I’m missing? Perhaps there’s a very important reason you decided to divide by price instead and I’m completely wrong, so please just try to understand my idea and if you don’t mind giving me your opinion on this, I would be thankful.
Cheers
Dennis currently uses this: difference = abs(close - SMA) * 100 / close
and you think it should be: difference = abs(close - SMA) * 100 / SMA
Using Dennis algorithm correlates very well with the actual pairs movement. I think if you use the absolute value it will work as expected.
Hello Kevin,
I’m not Dennis, but allow me to butt in here.
From one math purist to another 
, I can tell you that you are correct in your observation that the percentage should be calculated in terms of the SMA, not the price.
However, making this correction would not improve the utility of Dennis’ strong/weak ratings and rankings.
I proved this to myself 2 years ago, in a lengthy study comparing the results of Dennis’ method with an alternative method which I devised, incorporating (among other revisions) the correction you are suggesting.
A description of my alternative method would be off-topic here in Dennis’ thread. Accordingly, I will describe it for you (and for anyone else who might be interested) in a separate thread.
Hi Clint,
Thank you for highlighting that the final result doesn’t get much better with this correction.
That makes sense. It shouldn’t affect the positions in the ranking a lot, if at all. At most it would express more accurately by what percentage the price is away from its SMA.
Well, at least I’m not the only one that noticed this, and sometimes a mathematical error still leads to the same result.
Thank you very much for sharing the results of your alternative method, I will read with great interest.
Kind regards from another math purist 
I had the same problem
US stock market continues to grind higher and so does AUD
You mean I have been doing it wrong for 5 years and still hitting about 75% winning trades, 
The whole European sector caught a bid today, AUDCHF gave back all its gains, AUDUSD is our newest Top Trade
US stocks pulled back today, we will need them moving up if the AUD is to continue its move higher
This calculation is really useful for forex. Some mistakes have better results. This happens in many fields, from Engineering to Psychology and so on…
Dennis, would you be willing to share with us our P/L, average profits and average of losses? I’m very curious about this number since just winning rate doesn’t tell much. It can be in percentage points if you don’t mind.
Crazy April has ended, but stocks are still on a extended run. On your experience, what’s the effect of the seasonality in May and on forex?
Just to know, I incorporated your analysis on one of my systems. So far so good, keep with the good work =)
Tough crowd…
AUD holds to top spot but is clearly weakening as US stocks end the week down, now the question is will the Fed intervene and pump up stocks enabling AUD to resume its uptrend
There is the old saying among stock traders " Sell in May and go away" this has a good track record and with stocks entering May after their best April ever a May selloff seems inevitable, But will the US Fed running the money printing press 25 hours a day ( Yes they created an extra hour out of thin air) a selloff here is no better than a coin toss
As far as my own Trading that is something I have never shared as doing so will no doubt effect the way I trade. As I have shared before, I do not blindly take all the SW trade signals and I have a handful of pairs that all my trading is done on,
I hope this helps
Now lets get this country back to work
I understand and it’s ok. It’s a good number to be able to think about a strategy, but the SW is more a trend direction then a system, so no point in showing this.
So far May started bad and we are about to test the strength of this rally. Let’s watch the reactions on that number 8 on the ranking. Still, Powell was very clear that there are no limits. Maybe now that all the funds were able to capitalize on this rally and we can finally see lower lows.
After all the doom and gloom I read and watched over the weekend I fully expected a big down move today in stocks but most of the market held up pretty good, on the currency side Euro took a hit today suggesting that EURAUD* could still have more downside. One day does not make a trend so we will see what tomorrow holds
Yes it is hard to believe that after all that data globally, the indices climbed higher in US.
EURAUD is back at #1 but not yet to any new lows, The whole market seems to be in a holding pattern here, nobody really knows what the future holds for us, The two extremes would be “1984” and “Brave New World” But if they keep us at home maybe “Ready Player One” will be our future
