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1. Naked chart is not the way to go. You already admitted that you use some sort of Bull/Bear in some trials – and that’s NOT naked chart.
Bull bear strength I determine from the candles and not with an indicator, so naked candle chart to be exact i guess.. I use trend-lines and I circle areas of strength but that alone proved to be superior than all the indicators I have used based on my own person experience and based on my personality
I just didn’t find a good indicator after years of developing them and using many others have developed that gave me an edge.. to me I found indicators to be confusing and distorting the reality and taking away from what I’m able to determine simply by looking at the charts. BUT, I will admit to one thing. I wouldn’t be here if I still didn’t believe that there got to be an indicator that would be superior to just looking at a candle chart alone for me. It’s from looking at naked charts and candles that I saw how I was determining strength based on candle movement. What I cannot do is look at all the 28 major pairs and figure out the strength since that would just drive me crazy, I can do that with 3-4 charts but I want to be able to do that with all of them and to get a single strength for each individual currencies. The way I see it, price goes where the strength is. The consolidation areas is when I need to enter towards the strength. One of my favorite patterns is the triangle pattern and then predicting which direction it would break. This gave me an idea for how we should test this indicator that eventually will get built. Test case: The currency strength indicator must be able to predict with a good enough accuracy which direction the price will break in a consolidation zone or when a triangle pattern has formed.2. “Currency Strength” indicator should have PREDICTIVE nature (at least on smaller TF’s). 3. Based on #2 above – it can’t use standard MA’s, CCI, WPR, etc. – because (lagging, lagging, lagging…)
Agreed!
4. “True” currency strength should manifest itself on other, related, currency pairs.
Could you please explain what you mean by this?
5. In order to avoid the inter-relations effect among currencies we need some EXTERNAL “anchoring” (KIAD’s terminlogy – already discussed here) as reference.
Agreed!
6. Question: Does individual currency “market share” factor should be used? is it logical?
We will have to experiment both scenarios before dismissing/accepting either I think
7. Question: When comparing currency pairs, should we use currency pairs “crosses? my experience shows that they introduce “noise”, but I’m open to others logic.
I think same as above. I would need to need to test both cases.. Shouldn’t be too difficult.
8. Question: How to deal with “Rate of Change”?
One solution I came up with is to use pure pips instead of ROC. For example, in an index type of an indicator, if we anchor it to certain place in time, then we can simply measure the change in pips and relate currencies to each other with pips. If the anchor was set to Midnight and now its 8am, I would end up with something like +600pips for JPY vs -200pips for USD total movement. Perhaps something similar for the currency strength as well?
What are the most earliest signals that a currency is strengthening (or getting weaker)? We don’t need ALL the obvious signs (too late and not predictive), just the 2-3 earliest signs.
Yes, this is a very good question. This is where naked charts come into play for me. I noticed a certain pattern that plays out indicating the strength of the bulls vs bears during consolidation and triangle patterns when I studied naked charts. Here is that indicator that I made: http://penguintraders.com/forums/topic/bull-bear-power-indicator/ There are a couple of screenshots there that I posted. I called that indicator power but its similar to strength. I haven’t made that into a multiple currency scanning indicator yet so I can get individual currency strengths. I think that will be my next step. I will show my progress on that thread
Looking at a chart of one currency pair doesn’t always show you currency strength.
It EURUSD is going up, it doesn’t automatically mean that the EUR is “strong”. it might be “flat” and the USD is “weakening”. It might be that both are “Weakening” but the USD ROC is faster than the weakening EUR.
So absolute currency strength should be measured across the market and not based on a single pair.
G.
Just Adding ‘spicy’ to this great discussion…
Looking at this made me think the importance of time when determining strength. It’s like how fast a price level is rejected might say something of the underlying strength/weakness. So the candle wick size and the number of M1 bars (minutes) it took to form that wick might be enough to determine the force which was applied. Yea? More ideas to test.. haha
Focus, Patience, Determination & Order in chaos
Just Adding ‘spicy’ to this great discussion…
Looking at this made me think the importance of time when determining strength. It’s like how fast a price level is rejected might say something of the underlying strength/weakness. So the candle wick size and the number of M1 bars (minutes) it took to form that wick might be enough to determine the force which was applied. Yea? More ideas to test.. haha
This might bre good to predict currency pair movement, but not currency strength.
G.
Remember that Momentum is a physical force – it needs a greater force in the opposite direction in order to stop and reverse it.
G.
Remember that Momentum is a physical force – it needs a greater force in the opposite direction in order to stop and reverse it.
Right, I was thinking along the line of sum of forces. Strength is the measure of how much of an opposite force can be applied before something breaks. So in currencies, strength would mean something like how much force a currency can take before switching directions. So in return, strength is directly proportional to force I think. If we can measure force, then we should be able to arrive at strength in my opinion the way I see it.
Focus, Patience, Determination & Order in chaos
On large orders – they will manipulate the market. If they need to buy 50 milion USD, they will SELL 1 mil every few minutes to drop the price, and then start to buy at a cheaper price – again in small chunks.
This is an interesting topic too.. I have been thinking about how they might be manipulating the markets. I don’t have any buddies that work at any big banks so I have no idea. But I was thinking that if I had the money to be able to manipulate markets the way I would do it might be in the following way. If I need to buy 100 million EUR with my USD, I would lower the price of EUR indirectly. The way I would do this is by increasing the demand of the other currencies indirectly lowering the demand for the EUR. And while this is going on, I would buy up EUR. I need to put more thought into it but this is the idea behind that basket currency indicator that I made. What it’s showing me I think is the manipulation that happens before the big move across related currencies.
I’ve been there and I can tell you how it’s done.
They are spreading small volumes on everything that against the USD. The purpose is to go undetected by volume surges in one or two currency pairs, otherwise others will notice the “trick” and not fall for it.
They have a computer software to distribute the chuncks in smaller lots and in the correct timing intervals.
G.
Remember that Momentum is a physical force – it needs a greater force in the opposite direction in order to stop and reverse it. G.
Momentum is not Force, rather Force is a part of momentum:
Force = mass x acceleration
Momentum = mass x velocity
Therefore:
Force x Time = Momentum
Applying a force for 1 hour to an object will give it more momentum than the same force for 1 minute.
What is the force for forex then? Volume could be a force. However, there is bull volume and bear volume. When bull volume is greate than bear volume the bull volume will move the price up, temporarily at least.
.. Unfortunately, what ‘at last’ we could see in our platform screen is the result of so many ‘previously distorted’ data feed, so this is also could answer the 2nd question, what the bank treasury floor trade room trading screen displayed is not the ‘above’ end user/retail trader charts, but order flow positions that ‘flashing’ in nano seconds..
Dear Kiads,
Is “order flow” the key words here?
Best regards.
Nothing has ever motivated me more than this...
Thanks for the suggestion GG
I moved the market maker and volume related discussion to its own thread:
http://penguintraders.com/forums/topic/market-movers-and-shakers/Thanks for starting it and for all the thoughts and ideas. It’s extremely interesting!
Focus, Patience, Determination & Order in chaos
Eurovision 2015: “Here are the results of the Swiss jury: …” G.
For those of you who are trying to trade the “Cross” of two currencies: It’s probably will be Ok, but “Crosses” are usually too late. Trade should start with and when two currencies change position either against or away from one another. G.
Thanks G, great. Have you a result, how many % probability that the strong currency will go up again after we see the “weakness” of it (CHF in this example)? In this case, after we see CHF will go down and EUR will go up, then we try to buy EUR/CHF. Because of we trading it before they cross each other (this will too late), it is possible that they will continue with its previous direction (CHF going up, EUR going down). Is it a rare event ? Thanks in advance brother.
Do the math: There are 3 possible outcome for each currency movement: Down, Up, Flat For 2 currencies you have 6 possible math outcome, 4/6 are in your favor or moving sideways. In reality, I’ve never seen BOTH currencies reverse at the same time. Furthermore, I don’t trade just based on this one – but with support of either Volatility, Momentum or Volume. This ForexGT_Spaghetti is my “good morning” view (full screen, no price chart) of the WHOLE Forex market – what I should trade and what NOT to trade. There is NOTHING more important than this, and there is nothing as predictive as a good “currency strength” that I came across. G.
Many thanks G. How do we calculate momentum? Can we use standard MT4 momentum indicator? Is Time important in momentum calculation? Thanks in advance.
This is what it looked like…
Sorry for the late reply, but really fascinating result!
and very good talk is going on. not index, not value, but strength! very interesting!
I am novice to this area so I will wait and see.
This is what it looked like…
Sorry for the late reply, but really fascinating result! and very good talk is going on. not index, not value, but strength! very interesting! I am novice to this area so I will wait and see.
<h2>”not value, but strength”</h2>
What is the difference? If there is rising value there is rising strength. It is just words, nothing else Jim apart from one subtle thing – time.
How about this, what makes one currency desired by others? Is it determined by current economical factors? Definitely is!! Why? Because value is just a stardust, something intangible/unsubstantial YET some currencies rise and fall because of some reasons which means…….that there are some factors which influence value and what also follows…. price.
Why somebody buys/sells one currency? I am not asking about cross, forget about it, I am asking about the value of prime, single currency, let call it X. What makes X to rise in value and getting stronger? And first of all WHAT IS MONEY? What is it exactly?
You must define money and its value to understand strength of X, if you need predictive indicator YOU NEED TO UNDERSTAND VALUE OF MONEY…as when value is rising (X is more desired) somebody buys it and X is gaining strength hence price is rising!
Just my opinion…
ps. Why when $ rising is rising across all markets, not one or two but all, think about it.
The FX market is currency exchange. Currencies are not money. They are issued by government by fiat. Hence the term fiat money, which is what a currency is. Gold is money.
The FX market is currency exchange. Currencies are not money .
If currencies are not money, what is? And where did I wrote that currencies are money? Read it again please.
“They are issued by government by fiat. Hence the term fiat money, which is what a currency is”
So you say that currencies are not money and few words later “… fiat money, which is what a currency is” . So it is not money it is FIAT money?
What does it mean issued by FIAT? You mean issued by governments as fiat currencies??? Term FIAT means NOT BACKED by physical commodity, based on S/D law…
“Gold is money”
Say it to those who bought it in 2011/2012…$ was FALLING in price while GOLD was RISING…today other way around…in other words can’t be unless you are gold bug :)
Come on people…what is today’s GOLD for currency?? Think like them WHAT WOULD YOU DO WITH 1 Billion $ if you would be scared to loose them…or need to keep it in LIQUID market in case you would need cash? Forget about FX…we are talking about Value/strength and where is it comes from.
ps. Also forget for a moment about “manipulation” as it is just byproduct of how the markets works…let say lesser friend of the big boy called FLOW.
ps2. please don’t get annoyed…it is just my way to answer I seem to be arrogant sometimes but it is not true, I just like to challenge people :D
I copied this from a webpage, as I would not explain it as well as this does.
According to Aristotle, for something to be considered money, is has to fulfill four characteristics:
1) It must be durable. It can’t fade, corrode.
2) It must be portable. It has to be ‘dense’ so that you can take it with you when you travel to the market.
3) It must be divisible or, ‘fungible.’ This means that if you break it up into smaller pieces each smaller piece when you add them up will equal the value of the original piece.
4) It must have intrinsic value. This means it must have value whether or not it’s used as money per se.
Governments issue fiat money. Fiat … by decree of the government saying that the currency is money when it is not. What is the intrinsic value of a paper currency? The value of the paper it is written on.
Manipulation is not a byproduct of the market. It is a prime driver of most markets. Easier to do manipulation on stock and bond markets because they are so small. More difficult to do with the currency exchange market but the governments have admitted that they have been doing it.
I copied this from a webpage, as I would not explain it as well as this does. According to Aristotle, for something to be considered money, is has to fulfill four characteristics: 1) It must be durable. It can’t fade, corrode. 2) It must be portable. It has to be ‘dense’ so that you can take it with you when you travel to the market. 3) It must be divisible or, ‘fungible.’ This means that if you break it up into smaller pieces each smaller piece when you add them up will equal the value of the original piece. 4) It must have intrinsic value. This means it must have value whether or not it’s used as money per se. Governments issue fiat money. Fiat … by decree of the government saying that the currency is money when it is not. What is the intrinsic value of a paper currency? The value of the paper it is written on. Manipulation is not a byproduct of the market. It is a prime driver of most markets. Easier to do manipulation on stock and bond markets because they are so small. More difficult to do with the currency exchange market but the governments have admitted that they have been doing it.
With all do respect to Aristotle, can explain to us HOW IS THIS GOING TO HELP US TO FIND VALUE/STRENGTH?
If manipulation is NOT byproduct and it is prime driver EXPLAIN to us how this manipulation WORKS please, I would like to hear. And it is apparently easy to manipulate BOND market because it is small :) Please tell us how it is DONE?
Where governments admitted it that they have done it – manipulate currency and how they have done it?
ps. for others reading if there are any…how is paper money created (either in physical form (1% in circulation or electronic) ??
Hi Kiads, in one of your earlier posts you said something about “when we know when and where the reaction” starts and you posted a chart with bollinger bands etc.
Can you explain more what indicators you use for determining when and where the reaction starts?
Actually before you do answer I will move this little bit forward as you have NO IDEA what are you talking about. You do not know how market structure works, not only FX, but overall. Faster we will go over it faster we reach the target. Don’t take it personally BlackStack, ok? Believe in whatever you want.
1.For paper money to exist there have to be something underlying as if there isn’t, you will have Zimbabwe in your country. So again what is it?
2. If we are in the world of Aristotle: in the whole there is more wealth in USE then in OWNERSHIP? What does it mean? Wealth in use and in ownership?
3. Bond market is THE PRIMARY MARKET as this is where it is all starts from macro side….or if you prefer from micro point of view “mr. Jones come to shop and BUY socks (to be easier this are not american socks as those were imported to US.)
4. 5 trillion a day market IS A FALLACY…think about it as most of you think about spot while FX contains futures, options and forwards…+ spot you trading/gambling at. Why is it fallacy?
Tiny hint. Retail trader x trades 1 lot with retail trader y. One is selling and other is buying, both have 1000$ on their account….yet their trade in volume is larger than their accounts combined. How is that possible. That is FAKE side of the market – Tier 3- micro world of retail.
Mercedes-Benz comes to DB and want to BUY 200 mln $ to fund their US operations…and pay in Euros…through the phone they say how much they want and at what price, DB will accept (as they are probably their dealer) and USE forward deliverable to close the deal. What this does to DB is this…..DB is now 200mil $ short (as they have Mercedes Euros) so any move in $ against them will create HOLE in their balance sheet (they will loose on the deal). In the other words DB HAS LONG EUR/USD position…..so they will hedge same amount on spot FX …….BUT TO DO IT SOMEBODY HAS TO TAKE OTHER SIDE OF THAT TRADE…. It will be either THEIR own client (on their internal exchange as every tier 1 bank their operate few) OR other banks if they send this quote to EBS/REUTERS…..and DB counter party lets say UBS ….and this bank have agreements as liquidity provider with brokers and other exchanges and they will show those “200mil” quote to them because they know if they hit that button UBS can hedge it instantly on EBS……so we have 200 mln in EBS, 200 mln to some brokers and 200 millions to some exchanges in total few times 200 mil liquidity (let say x5 = 1 bil) provided and in reality ONLY 200 millions liquidity. It is even worse than that as there are MANY MARKET participants and many quotes so market really multiplying liquidity levels…..if JPM and Citi are liquidity providers to currenex and they BOTH see 200 mln quote on EBS they will “show” 200 mln each to currenex clients that is 400mln in total. Why do you think that gave you LEVERAGE…CREDIT FOR FREE ??? Have you ever heard about credit for free?? They needed you as that risk taker, to spread it across market place and minimize the risk.
5 Trillion market is just fallacy for guys like you……HOT POTATO changing HANDS…..to simplify it….I have one mandarin in hand and you are allowed to hold it, every time bank/broker/speculator have touch it or holding it his bearing that risk and THEY WANT TO MOVE IT ON TO ANOTHER PARTY….and this party IS YOU…you bear the risk , you RETAIL TRADER you are risk taker…end user of the SPOT FX or any other speculator on ECN marketplace.
And guys from above post tells me that primary drive of market is manipulation…..ok, I will
:)ps. I have to go with dogs , so I am sorry for any mistakes as written quickly.
ps2. edited :D
@mth2014 Hi Kiads, in one of your earlier posts you said something about “when we know when and where the reaction” starts and you posted a chart with bollinger bands etc. Can you explain more what indicators you use for determining when and where the reaction starts?
Hi Brother, Please forgive me.. I just ordinary man, so this is only my own opinion without any ‘formal’ knowledge.
Is not about indicators or tools, it just my own experience starring chart for more than 12 years.. , even we could see it with only naked chart (since chart also indicator)..
and I’m sure when I post this picture the’ reaction’ at EURUSD already begin…
Best Regards
MTH
PS. ah.. here come the ‘Soon…. hehehe’
Intuition, Experiences and Common sense..
http://www.binaryoptionsedge.com/Hi Brother, Please forgive me.. I just ordinary man, so this is only my own opinion without any ‘formal’ knowledge. Is not about indicators or tools, it just my own experience starring chart for more than 12 years.. , even we could see it with only naked chart (since chart also indicator)..
But isn’t that what trading is about. I like your statement!
Look guys, it is good to know how these things work…but that is all. Don’t try to learn it, it is for you info only. There are some guys who know this staff better than anyone else but they are shit traders, hence they teach others :D Also the way to make money and others fall for it. So Kiads here is giving you best advice you can get…experience in the end will make you profitable but you have to watch that staff, feel it. I am not saying that indis does not work, I am saying without your own judgment they will not work as market is not mechanical and you are not computers….
Even if you will find value indicator, you will have to make judgment call whether VALUE will chase price or the other way around, only in few situations it will be obvious.
Now, I will be quiet and you guys continue, sorry to cut in.
Hi Brother, Please forgive me.. I just ordinary man, so this is only my own opinion without any ‘formal’ knowledge. Is not about indicators or tools, it just my own experience starring chart for more than 12 years.. , even we could see it with only naked chart (since chart also indicator).. But isn’t that what trading is about. I like your statement! Look guys, it is good to know how these things work…but that is all. Don’t try to learn it, it is for you info only. There are some guys who know this staff better than anyone else but they are shit traders, hence they teach others :D Also the way to make money and others fall for it. So Kiads here is giving you best advice you can get…experience in the end will make you profitable but you have to watch that staff, feel it. I am not saying that indis does not work, I am saying without your own judgment they will not work as market is not mechanical and you are not computers…. Even if you will find value indicator, you will have to make judgment call whether VALUE will chase price or the other way around, only in few situations it will be obvious. Now, I will be quiet and you guys continue, sorry to cut in.
Indeed, Brother.. You Also 100% correct
We need all the fundamental about macro and micro world economics knowledge as the strong base to stand and back up our ‘point of view’.. and yes spot FX is only illusion part of the whole process , and to look from the correct ‘point of view’ we need deep inter market analysis, not only single pair currency chart or only 8 major currencies charts… from spot FX side…
and about ‘money’, my own opinion about what the meaning of ‘money’ is only subjective measure tools.. base on temporary agreements between party involved…
Best Regards
MTH
PS. btw I’m waiting my next ‘soon’ in W1 point of view..for EURUSD..
Intuition, Experiences and Common sense..
http://www.binaryoptionsedge.com/Ah ok I probably asked the wrong question. I wanted to know if you had used an additional entry/indicator on the trade summary you posted or if you used only your kindergarden currency strength indicator.
Hi Brother, Please forgive me.. I just ordinary man, so this is only my own opinion without any ‘formal’ knowledge. Is not about indicators or tools, it just my own experience starring chart for more than 12 years.. , even we could see it with only naked chart (since chart also indicator).. But isn’t that what trading is about. I like your statement! Look guys, it is good to know how these things work…but that is all. Don’t try to learn it, it is for you info only. There are some guys who know this staff better than anyone else but they are shit traders, hence they teach others :D Also the way to make money and others fall for it. So Kiads here is giving you best advice you can get…experience in the end will make you profitable but you have to watch that staff, feel it. I am not saying that indis does not work, I am saying without your own judgment they will not work as market is not mechanical and you are not computers…. Even if you will find value indicator, you will have to make judgment call whether VALUE will chase price or the other way around, only in few situations it will be obvious. Now, I will be quiet and you guys continue, sorry to cut in.
Indeed, Brother.. You Also 100% correct We need all the fundamental about macro and micro world economics knowledge as the strong base to stand and back up our ‘point of view’.. and yes spot FX is only illusion part of the whole process , and to look from the correct ‘point of view’ we need deep inter market analysis, not only single pair currency chart or only 8 major currencies charts… from spot FX side… and about ‘money’, my own opinion about what the meaning of ‘money’ is only subjective measure tools.. base on temporary agreements between party involved… Best Regards MTH PS. btw I’m waiting my next ‘soon’ in W1 point of view..for EURUSD..
and about ‘money’, my own opinion about what the meaning of ‘money’ is only subjective measure tools.. base on temporary agreements between party involved…
This is also fiat money. When you need an agreement to call it money then it probably is not money. If there is no intrinsic value then it is not money.
[Hi Brother,Sorry to sidetrack, your knowledge are incredible,
Pls may I know what is the four big violet boxes and four small boxes mean? I measured them physically using ruler, haha . they are identical in length and breadth. If u do not mind, could u pls share your understanding, greatly appreciate, thanks in advance.I only know I know nothing
Skype: learnalways@outlook.comand about ‘money’, my own opinion about what the meaning of ‘money’ is only subjective measure tools.. base on temporary agreements between party involved…
This is also fiat money. When you need an agreement to call it money then it probably is not money. If there is no intrinsic value then it is not money.
Umm.. don’t you think that ‘intrinsic value’ term is also result from an agreement between societies (not all human, only who that called them self ‘civilized societies’).. because when I try to trade with remote island tribe to exchange my gold nugget with banana, they throw out my gold nugget…lol… (sorry it’s only a joke..).
Best Regards
MTH
Hi Brother,Sorry to sidetrack, your knowledge are incredible, Pls may I know what is the four big violet boxes and four small boxes mean? I measured them physically using ruler, haha . they are identical in length and breadth. If u do not mind, could u pls share your understanding, greatly appreciate, thanks in advance.Hi Brother, yes that rectangles are identical to show when in wider perspective, the movement (including strength, momentum, acceleration-deceleration, angles, etc) become more predictable and equal in some degrees. Roughly 100% action (bigger rectangles) will receive approximately 50% reaction (smaller rectangles).. lol I don’t remember is there any physics formula to explain that phenomena .. hahaha
maybe ricochet or ballistic trajectory if I’m not wrong..Best Regards
MTH
Intuition, Experiences and Common sense..
http://www.binaryoptionsedge.com/
I just didn’t find a good indicator after years of developing them and using many others have developed that gave me an edge.. to me I found indicators to be confusing and distorting the reality and taking away from what I’m able to determine simply by looking at the charts. BUT, I will admit to one thing. I wouldn’t be here if I still didn’t believe that there got to be an indicator that would be superior to just looking at a candle chart alone for me. It’s from looking at naked charts and candles that I saw how I was determining strength based on candle movement. What I cannot do is look at all the 28 major pairs and figure out the strength since that would just drive me crazy, I can do that with 3-4 charts but I want to be able to do that with all of them and to get a single strength for each individual currencies. The way I see it, price goes where the strength is. The consolidation areas is when I need to enter towards the strength. One of my favorite patterns is the triangle pattern and then predicting which direction it would break. This gave me an idea for how we should test this indicator that eventually will get built. Test case: The currency strength indicator must be able to predict with a good enough accuracy which direction the price will break in a consolidation zone or when a triangle pattern has formed.
Pls may I know what is the four big violet boxes and four small boxes mean? I measured them physically using ruler, 
Pls may I know what is the four big violet boxes and four small boxes mean? I measured them physically using ruler, 
haha . they are identical in length and breadth. If u do not mind, could u pls share your understanding, greatly appreciate, thanks in advance.
maybe ricochet or ballistic trajectory if I’m not wrong..- You must be logged in to reply to this topic.