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Currency Strength Score/Index formula

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Icham Aidibe
10044
Icham Aidibe 2014.12.04 10:25 

Hi,

I'm looking to make an EA works with multiple currencies, there's a lot of indicator that show a meter based on a score or a index. Unfortunately, none of them's code is available. I've googled to find the formula, but ... didn't find nothing.

Anyone knows such a formula please ?

Mehrdad Shiri
4480
Mehrdad Shiri 2015.01.31 13:35  
blouf:

Hi,

I'm looking to make an EA works with multiple currencies, there's a lot of indicator that show a meter based on a score or a index. Unfortunately, none of them's code is available. I've googled to find the formula, but ... didn't find nothing.

Anyone knows such a formula please ?

see this: https://www.mql5.com/en/forum/16365

file attached.

Files:
Stuart Browne
5814
Stuart Browne 2015.02.01 02:34  


I prefer to use "raw" currency strength rather than abstract values that some currency strength indicators use. And it's simple. You simply add up all moves in each currency pair. This is normally done on the 8 major currencies (28 pairs).

So to get say AUD's current strength you would look at each pair AUD is in and see how much it has moved (in percentage terms) from open to current price. Remember that a positive or negative move will depend on if the AUD is the base or quote of a pair. So the (exaggerated) calculation would look something like this:

AUDCAD = 2.2%
AUDCHF = 1.8%
AUDJPY = 2.5%
AUDNZD = 1.2%
AUDUSD = 1.6%
EURAUD = -2.3% (so + 2.3%)
GBPAUD = -1.9% (so +1.9%)

Total = 13.5%

You don't then divide it by 7 to get an average. You want the raw strength and 13.5% is it. That is the current strength of the Aussie compared to the other 7 currencies. You now do the same calculation for each of the other currencies.

If you've done it correctly, when you add up all 8 currencies, the final answer should be......zero! Why? Currency correlation :)

You can then display the results as either a meter, or as I prefer, a line study. This way you can see the change over time and rate of change to see which is gaining strength, which is losing strength and the speed or strength of the change. So you end up with something like this:


CSI

</Rant>  :)
 

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