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Discussion of article "Working with currency baskets in the Forex market"

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MetaQuotes Software Corp.
Moderator
182373
MetaQuotes Software Corp. 2016.10.04 11:58 

New article Working with currency baskets in the Forex market has been published:

The article describes how currency pairs can be divided into groups (baskets), as well as how to obtain data about their status (for example, overbought and oversold) using certain indicators and how to apply this data in trading.

How should we decide on performing a trading operation with a currency basket? It would be quite difficult to do so based solely on currency pairs behavior due to the large size of the baskets. We need additional technical data on basket currency status parameters. Let's focus our attention on the RSI indicator graph for the three currency pairs from the GBP basket, namely GBPUSD, GBPJPY and GBPCHF. D1 graph is displayed in the image below:


As you can see, these three graphs have much in common: many extreme values are located similarly, while up and down intervals also have much in common. This similarity can be explained by the same basket currency — the British pound. Its strengthening and weakening lead to such up and down intervals.

Author: Andrei Novichkov

Bernhard Schweigert
6534
Bernhard Schweigert 2016.10.09 12:21  

Excellent article Andrei. This theory I practice since a very long time and is very profitable. Jet I do not trade baskets but the strongest currency against the weakest. This will reduce our number of trades because we do not need open 7 trades to buy or sell one currency basket, instead we have only one trade to execute which is paired of the strongest and weakest base and quote currency.

If you dont mind to link, it is here

Andrei Novichkov
3179
Andrei Novichkov 2016.10.09 18:46  
Bernhard Schweigert :

Excellent article Andrei. This theory I practice since a very long time and is very profitable. Jet I do not trade baskets but the strongest currency against the weakest. This will reduce our number of trades because we do not need open 7 trades to buy or sell one currency basket, instead we have only one trade to execute which is paired of the strongest and weakest base and quote currency.

If you dont mind to link, it is here

Hello, Bernhard

Thank you for your review), I agree with your strategy on your link, very interesting.

I'm writing an article about patterns, there will be about it - "strongest currency against the weakest" )


Peejay Lal
190
Peejay Lal 2016.10.23 19:02  

Hi Andrei,

Excellent article. Some people have tried Basket trading based on index of hi/low bid price/2, some have based on MTF Moving Averages. You have shown RSI and Stochastics use. 

I really find them useful only for momentum based short-term frame trading.

Why and when momentum accelerates? If you can somehow tie up basket trading with patterns, then it will be useful.

Can you please make testing indicators/EA for Breakout of basket hi and low of certain number of bars (zig zags) to identify momentum pattern?

I think basket trading only works when market makers need to guide the market on the eve of news events or when the currency gets tired and reverses direction.

So it is important to have direction bias first and then keep an eye for momentum to time the trade. 

Andrei Novichkov
3179
Andrei Novichkov 2016.10.25 09:46  
Peejay Lal :

Hi Andrei,

Excellent article. Some people have tried Basket trading based on index of hi/low bid price/2, some have based on MTF Moving Averages. You have shown RSI and Stochastics use. 

I really find them useful only for momentum based short-term frame trading.

Why and when momentum accelerates? If you can somehow tie up basket trading with patterns, then it will be useful.

Can you please make testing indicators/EA for Breakout of basket hi and low of certain number of bars (zig zags) to identify momentum pattern?

I think basket trading only works when market makers need to guide the market on the eve of news events or when the currency gets tired and reverses direction.

So it is important to have direction bias first and then keep an eye for momentum to time the trade. 

I think that baskets work best for trend reversal. When one currency pair in too enhanced, and the second is too attenuated.
AndreaTrade1
5
AndreaTrade1 2016.11.19 12:19  

The indicators doesn't work in the Metatrader Strategy Tester ( data displayed are different  of the real data).

Is it a limit of MT4 or should be possible to code them working in the strategy tester ?

Bernhard Schweigert
6534
Bernhard Schweigert 2016.11.19 19:45  
AndreaTrade1:

The indicators doesn't work in the Metatrader Strategy Tester ( data displayed are different  of the real data).

Is it a limit of MT4 or should be possible to code them working in the strategy tester ?

Multi pair indicators usually never work in strategy tester because it needs too many other chart feeds.

Strategy tester does not provide all needed data.

Andrei Novichkov
3179
Andrei Novichkov 2016.11.20 13:39  
Bernhard Schweigert :

Multi pair indicators usually never work in strategy tester because it needs too many other chart feeds.

Strategy tester does not provide all needed data.

....And we need a very good historical data. For all chart feeds.
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