Simple Strategies using the FXCORRELATOR Indicator :-
Ok - I have written literally hundreds of strategies for using my indicator over the last 20 years or so.
However the primary use of this tool is to get traders onto :-
THE RIGHT CURRENCY PAIR(S)
AT THE RIGHT TIME
IN THE RIGHT PLACE
In other words the primary use of this indicator (and any FX strengthmeter) is to ensure traders are only focused on Currencies and related currency pairs with the highest probability of delivering winning trades.
Now there are many interpretations of this - just as there are infinite ways of determining what is a good trading signal or pattern - however in this article I will reduce the criteria to just seeking Pairs with strong trend signals for ease of discussion.
so heres my indicator on a pair that is demonstrating a strong trend .....
(See attachment cable 1)
ok lets remove the other currencies just leaving the Green USD and the Red GBP.....
(See attachment cable 2)
Better ? - ok if you read the guides published above and look at my videos on youtube you will know that the ZERO dotted line on the indicator chart is very important to my trading ......it tells me that any currency index ABOVE the zero is showing bull and strong for the Moving average being used (default 20ma here) and any index line BELOW the zero is showing bear and weak.
can you see how this immediately provides more information than just the dumb and humble yellow 20 MA line on the chart ?
not sure ?....see below and how we can identify the OPTIMUM and powerful situations when both currencies are showing Strength and Weakness at the same time ......
(See attachment Cable 3)
In this simple strategy we should only consider looking for trades when the 2 currencies are on OPPOSITE sides of the ZERO ......as any other time the currencies are on the same side (either both Bull or both Bear) and NOT displaying strong enough BIAS to consider trading
from this basic benchmark a trader can begin to introduce their more familiar signals / patterns and other indicators that they use to trade the market. However by this simple method they will now be able to remove at least 50-60% of the 28 Currency pairs available to trade in the G8 and focus on the BEST opportunities.
This simple and basic Rule is the foundation of literally Hundreds of FXCorrleator trading strategies I have used over the last 20 years ...it is the building block for many i still use , alongside more traditional chart based patterns and indicators combinations
try it in any trend following strategy and see if it helps you start focusing on the pairs that are trending ....rather than your 2-3 favourite pairs (we all have them) that you trade continuously and follow signals loyally.....
when you decide to trade a currency pair without consulting the Fxcorrelator there is only a 27/1 chance you are trading the best signal