Currency strength or index? Which is better and why?

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Hello everyone,


I recently came with an idea of doing trading based on currency strength or currency index. The thing is that I'm having a little bit of confusion when deciding which one to use, so I came here seeking for your enlightment and wisdom :).

My idea is that (atm)...an idea and I'm also looking for suggestions or other people experiences that can become handy.

The idea is to analyze tick by tick and see which currency is the strongest against the other. What I have seen, is that when it cames to a currency strength meter, it measures the open and close prices and calculates the %, right? And, in order to get the actual strength of one particular currency (lets say the USD), it measures the % of all currencies that have USD involved. I saw a lot of this approach using time based candles, which I'm not a really big fan of, so I thought that range candles (eg: say 10 pips candles) or tick candles (eg: 1000 ticks candles) might be a better approach. In fact, I think that tick candles can be a better approach than range candles (if every candle is created every 10 pips, then the % difference should be always the same, right?).


On the other side, a currency index (like USD index) is a geometric relation between all currencies involving the USD, but it does not measure the open vs the close price, so I guess this is just a tick based approach? Then, AFAIK, an actual chart can be created based on that realtion, but what does that chart actually means? What does the actual number means and how it can show the strength or weakness of a currency?


Opinions? Suggestions?

Thanks! :D

 

Forum on trading, automated trading systems and testing trading strategies

Currency Strength MQL5

forcodes, 2020.04.08 23:41

This is just a video showing the method I use to calculate currency strength, that works for me. Hope it helps someone:


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