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Quantum Currency Matrix Indicator

Of all the four principle capital markets, the world of foreign exchange trading is the most complex and most difficult to master, unless of course you have the right tools! The reason for this complexity is not hard to understand.

First currencies are traded in pairs. Each position is a judgment of the forces driving two independent markets. If the GBP/USD for example is bullish, is this being driven by strength in the pound, or weakness in the US dollar. Imagine if we had to do the same thing trading stocks for example. Consider trading Google against Amazon. If this 'pair' were rising, is this being driven by strength in Google or weakness in Amazon? Almost impossible to analyse.

To compound this problem, every currency can be bought or sold against a myriad of other currencies. This raises the next key question.  If the GBP/USD is bullish once again, is the British pound strong against all the other major currencies, such as the GBP/JPY, the GBP/CAD, the EUR/GBP etc. If it is, then this is clearly a sign that the UK pound is being bought universally in the market. Equally for the US dollar, if it is sold universally in pairs such as the USD/CAD, the USD/JPY and others, then we can assume that the GBP/USD is rising as a result of strong buying of the pound universally, and strong selling across the market of the US dollar.

Finally, we come to the third problem, which is trying to assess the strength of this buying or selling. After all a currency may be overbought (strong) or oversold (weak) but how strong is strong, and how weak is weak.

Consider this for a moment. Assume you have decided to buy the GBP/USD and have the following information to help you in your analysis:

  • Whether the GBP is also being bought in all the other cross currency pairs
  • Whether the USD is also being sold in all the other major currency pairs
  • The relative strength of buying in the GBP/USD pair

Trading success is all about assessing risk and the probability of success on each trade. Would this information give you a high risk, medium or low risk trading position? And the answer……... is a low risk trading opportunity. After all, you are now taking a position based on a view across the market.

  • First, if you are basing your decision on universal buying or selling of a currency, then you are trading with the entire weight of the market, and not just on the analysis of one currency pair - it's low risk.
  • Second, if you know the relative strength of this buying or selling against all the other currency pairs, then this gives you the complete picture - if its strong, then again - it's low risk.
  • Third and last, if you know what the counter currency is also doing in terms of strong or weak, then once more if its strong - it's low risk.

This is where the Quantum currency matrix steps in. It provides the solution to all three problems in one elegant indicator, and is a complimentary indicator to the Quantum currency strength indicator. It shows you the complete picture across the market in a simple matrix, which works in all timeframes from 1 minute to 1 month.

From the eight major currencies come the 28 currency pairs which are then displayed in a table, with their relative strength scores, updated second by second and minute by minute. A score above 0.00 indicates bullish momentum and is displayed in shades of green, whilst a score below 0.00 indicates bearish momentum and is displayed in shades of red.

Each currency can then be isolated to show the 7 associated pairs and their relative scores. If all the associated pairs are showing similar strength (either bullish or bearish) then this is either a good time to join the move, or alternatively it may be an opportunity to wait for a reversal in trend as the pair becomes overbought or oversold.

The Quantum currency matrix gives you the tool to see the complexities of the forex market in real time across all the related pairs, along with the strength of the buying and selling. Whilst it is possible to do this manually using multiple charts, what a manual matrix will not provide is any measure of the relative strength. The indicator does this for you automatically by considering the price action across all the related currency pairs and then deriving the relative strength scores accordingly.

Borodin161 2015.03.27 22:21 

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Version 4.0 2018.08.16
- Switched the colors of the AUD and JPY buttons to match that of Quantum Currency Strength Indicator's
- Button colors can be changed through the Inputs tab.
- The color of each currency pair transitions from green (positive), to yellow (neutral), to red (negative) depending on its performance score
- New input: Bookmarked Currency Pairs - This is a new feature we added to the Currency Matrix which helps you keep track of currency pairs you’re interested in wherever they are in the list.
- New input: Button Size - You can change the size of the toggle buttons and the table by changing this setting. This is especially useful for screens with very low or very high resolutions. Its default value is 1 but you can enter negative values to decrease their size further.
- New input: Font Size - You can change the size of the text by changing this setting.
- New input: Use Classic Colors - Instead of using a Green-Red gradient, the indicator switches to a dual color scheme when this setting is true. When using classic colors, all currency pairs with a performance score above 0 are blue and those below it are red.