There are many strategies about using currency strength(forex index) in trading. I am trying to automate such a strategy. But before to continue, I have to mention the following:
In fact many indicators that pretend to measure currency strength actually, don't do exactly that. There is a widely accepted formula for currency strength measurement. It is explained here:
I, personally, am very suspicious about different "secret" formulas that pretend to enhance currency strength measurement. So, in my trading strategy idea I'll adhere to the classic formula of currency strength.
Forex is not about currency pairs - it is about currencies, each of them represents a separate economy, financial and political strength and so on. A currency pair is a combination of two movements, two tendencies, not a one.
So in very basic terms - if we combine an up trend for a currency with a down trend for another, we would increase our chances for a positive outcome. The problem here, is that there is a some sort of correlations between currencies. Considering the trend example - very often when one currency trend reverses, the other currency trend going in the opposite direction reverses too. So, there should not be a negative correlation between the currencies we choose to trade against each other.
So, the automated strategy should:
Forum on trading, automated trading systems and testing trading strategies
Something Interesting to Read
Sergey Golubev, 2017.09.16 05:48
Expert Advisor Programming for MetaTrader 5
This book will teach you the following concepts:
Whether you’re an experienced programmer moving from MQL4, or a novice just starting with MQL5, this book will give you the foundation to quickly program fully-featured and robust trading systems.
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Interesting thread (with some codes):
Good article was published -
R-squared as an estimation of quality of the strategy balance curve
Generally excluding dictatorships, it is impossible to quote any currency in the world except in terms of another currency. Thus, generally speaking, a currency value is always a currency pair.
Yes, I have to confirm, that the manual trading has a lot of advantages
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