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The good news is, you get the best meter in the Logikfx Academy. The bad news is, not all forex currency strength meters are built the same, so be careful!
How to Read Currency Charts
There are a lot of currency strength meters online that are purely based on "price action" the historical price of assets Logikfx's forex meter displays which currencies are strong and which are weak dependant on the strength of the underlying economy - updated every Saturday Morning at 9am GMT. Firstly, what exactly is a currency strength meter also called currency strength indicator? In very simple terms, a currency strength meter is a tool that shows you how strong, or how weak a currency is, or will be in the future.
The free currency strength indicators, available elsewhere online, use an aggregate exchange-rate price calculation to determine strength, which as mentioned above, has no predictive power at all. The better currency meters use fundamental data and economic indicators in their formula. For example, the Logikfx Macro Currency Strength Meter is calculated by crawling thousands of economic reports for over 23 different economies and then running them through a clever algorithm to determine currency strength based on future economic growth or contraction. It makes fundamental analysis accessible, and fast for its users.
For example, to calculate the strength of GBP, the Logikfx currency strength meter would consider the most influential leading, co-incident and lagging economic indicators e. It would then score them individually on their merit for an overall positive or negative impact on the economy sliding scale and combine all scores to give an overall strength or weakness reading for the Great British pound. This is done for over 23 currencies automatically to save traders a significant amount of time, and heavily reduce margin for error - the more accurate currency strength meter online.
In this day and age there are many problems with how currency strength meters are calculated. Many of the formula's are very sub-standard and only consider technical price features. If a currency strength meter doesn't have fundamental variables in its formula, the accuracy of its forecasting capability becomes neglible. Generally, forex traders should look for these red flags in currency strength indicators:. Uses only price in its formula. Emphasises importance of correlation.
Has no 'proof of worth'. Now, if you notice that a currency strength meter is using only backward-looking technical features, this is a major red flag. Instead, the best way to measure currency strength is with macro fundamentals. If an economy is growing, and there is more money in circulation through printing then overall the value of that currency will fall in the future - simple economic rules that pay off huge if you understand them. The Logikfx currency strength meter does all of that for you. Logikfx's macro currency strength meter comes with a vast variety of advantages for traders, including it's basis of leading fundamentals, exceptional time-saving, and the ability to use it quickly and effectively.
This makes it the best currency strength meter on the market. Professional traders are well known for using macro trading to decide on positions in their portfolio that's in both forex and stock trading. They use formulated macro currency strength meters like these as a quick guide to which currencies, and stocks, are going to appreciate or depreciate in value. They are excellent for determining long-term drivers of future price. An absolute huge advantage of using a macro currency strength meter is that it saves traders an unquantifiable amount of time, compared to, if they were to do the research by themselves.
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In fact, it's virtually impossible to do this fast enough, alone, for all tradable economies over Not only does it save time, but it also gives traders confidence that the strength readings are accurate eliminates human error , and efficiently allows them to incorporate fundamentals into their trading decisions. Many traders are surprised at how easy it is to understand, provided how valuable and effective the currency strength meter is. This is especially appealing for newbie traders who are just starting out, providing that extra confidence behind each trading decision.
You don't need to be a profressional trader to understand how strong or weak a currency is based on a simple score. Ever wondered how professional traders catch big trends before they happen?
With a currency strength indicator that combines all the associated pairs of a currency into one reading, it suggests that the currency itself is trending a certain way overall, as opposed to looking at only one pair. You can manually compare the performance of a currency through all the currency pairs used in the currency strength meter if you distrust its accuracy. For example, if JPY shows as strong but is down across the board, you may not feel comfortable using this particular currency meter. Choosing the right currency strength meter for you is really about whether you feel comfortable with its performance and if it fits into your particular strategies.
There are several currency strength indicators available for MetaTrader 4 MT4. Some of these utilize the typical heat map-style presentation of the data. Some others show a line graph of the relative strength of each currency.
Beginner’s guide - how to trade FX with currency strength indicator
Currency strength meters are a good way to eyeball what currencies are exhibiting strength or weakness across the board. Just seeking to explain such strength or weakness can alert you to changes in the fundamentals that you could otherwise miss. Currency strength indicators help you find markets where there is real imbalance that you can potentially exploit and make money.
In the currency market, as is with stocks and other commodity markets, trading is based on knowledge and understanding of different variables that influence the particular market. In the forex FX market traders are keen to understand forex currency strength , normally a result of changes in demand and supply of forex together with other local and international macroeconomic policies and factors that impact the foreign exchange market. The use of currency pairs to evaluate the strength of foreign currencies in the FX market is based on the fact that it is far too complicated to judge the performance of a currency in isolation in a bid to make a trading or investment decision.
In the aforementioned currency pair, it may be imperative after a strong gain on the trading day, to understand whether that gain in strength is a result of the Euro doing well or as a result of the US Dollar performing poorly. This Forex indicator displays which currencies are weak and which are strong at any given moment, reflecting that movement in a matrix. A good indicator of the money flow of the market should be the sum of all the graphs, by groups example: forex, raw materials, companies Typical examples of indicators based on currency strength are relative currency strength and percentage currency strength.
Their combination is called the "Forex Flow indicator" because one is able to see the whole currency flow across the forex market. From Wikipedia, the free encyclopedia. Value of currency. Print screen from analytic platform. The Theory of Money and Credit. Retrieved 1 June Technical analysis. Breakout Dead cat bounce Dow theory Elliott wave principle Market trend. Hikkake pattern Morning star Three black crows Three white soldiers.