The We-Spread mt4 indicator presented is suitable for those who want to study the markets with a different approach to the contents that are normally available in online trading bookstores.
I think the Spred Trading strategy is one of the best I've ever used in the last few years.
What is Spread Trading on forex
The Spread Trading is the study of the strength of 2 currency pairs at the same time in order to assess which of the pair is able to outperform the other. The object of the study is the correlation, volatility in time and the strength of trend.
What are advantages of Spread Trading on forex
Benefits are numerous and can be summarized in the following points:
- Hedging portfolio by not using Stop Loss.
- Never suffering from Hunting Stop Loss that brokers are so good at doing!
- Do not need to worry about a market crash, like the recent decision of the Swiss National Bank to abandon the defense share of 1.20 EURCHF.
- The repercussions of the decisions of the ECB rate or policies of quantitative easing etc...
Why I spend time on Spread Trading on forex
The spread trader aims to evaluate and control the prices of an underlying with respect to the prices of the underlying asset with different maturities or with related underlying prices.
For example, check how the EURUSD price evolves against the GBPUSD price. Or how the price of the future on the DAX expires in March with respect to the one with an expiry in June.
Spread trading requires strong insight from the trader. A good trader must not only look at the current price but how this evolves over time compared to other factors.
Making spread trading requires the ability to maintain and view different future scenarios in a single moment.
Spread trading can be applied both in the phases of trending markets and in phases of severe turbulence.
Spread trading on forex
To study the cycles of spread trading in forex, it is necessary to use specific tools that I have built over time based on my experience of errors and successes.
To calculate the spread and its direction I created the We-Spread.
The We-Spread indicator allows to study the spread trend with Monthly, Medium and Fast cycles.
The value of the positive cycle (ideally buy of EURUSD and sell of LEG2) indicates that the spread is bullish while if it is negative it indicates that it is bearish (ideally sell of EURUSD and buy of LEG2).
My study focused on the trend of these synthetic numbers of cycles over time.
To this end, it creates a concise print of the result of the spread cycle trend:
- Spread Trend Bullish
- Bearish Spread Trend
- FLAT Trend
The only parameters to insert are the name of Forex crosses where the trader want to study the spread.
There are 5 Legs to fill.
Default names are:
- Leg1: EURUSD
- Leg2: AUDUSD
- Leg3: NZDUSD
- Leg4: EURJPY
- Leg5: USDJPY
The trader must respect one of the most important rules, that is, having a lot of patience and waiting for the right moment to align all the rules!