10.7 CSS

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nanningbob
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10.7 CSS

Post by nanningbob »

I decided that the CSS is so important that it needed its own thread to teach and discuss. I am leaving the thread open but I want the first couple of pages to post and teach. If you do ask a question I will try to answer it but will delete it to get my posts up front first.

4.9.14 UPDATE 10.7 6XX CSS INFO PAGE FOLDER ADDED
This folder contains the updated versions I used for this system. I have the 24 pair screen and the 12 pair screen. The 24 pair screen shows the 24 pairs I normally trade. However, since I get so many signals I also downsized to a 12 pair CSS screen. This solves a problem I thought existed with the 24 pair screen in that the euro and chf were counting double value because the SNB has tied the CHF to the EURO. This overweighted the overall affect of these two currencies. I then went with a balanced approach of 12 pairs and if I couldnt decide between two pairs I took the one that had the highest swap rate. The 12 pairs included 4 pairs of gbp, usd, and 2 each eur and chf for 4 of them. The rest had 3, jpy,aud,cad,nzd, mixed and matched for 12 pairs. The one change you could make without upsetting the lines too much is to replace the cad/jpy with the usd/jpy. You would then need to change the code in the program to match. Anyway that is what I am going to do for now.

Baluda is the writer of this indi and also many others. If you are interested in his various Slope, CSS, and other indicators feel free to visit his threads at:
http://www.stevehopwoodforex.com/phpBB3 ... =45&t=2905
http://www.stevehopwoodforex.com/phpBB3 ... m.php?f=45

8.17.2014 UPDATE Yearly currency volatility. This chart shows the average pips per day over the last year from August 2013 to August 2014. I color coded the currency pairs so you could see which ones are the most volatile, volatile, medium, low. I am thankful to Elixe and Over60 for finding the websites so I could put this information together. Knowing the average range gives you an idea what to look for in pips in profit for the day. For example GBP/NZD is 167 pips a day average and you got in after it has move 50 pips. You may want to set your TP around 75-100 pips. USD/CHF is 56 pips and you got in after it moved 20 pips for the day then you could look at 20-30 pips profit for the day. Of course news and market conditions can also be considered when thinking how many pips you can get. Anyway hope it helps.
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"The key to converting something useful to others is simplicity. Complexity is the enemy to execution." Tony Robbins
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nanningbob
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10.7 CSS

Post by nanningbob »

The guts of how the CSS works - simply put it compares the strength of each currency Vs the entire selection of currencies in currency pairs you have chosen - using each pair. What that means is - if you have all the standard symbols included and are looking at the CSS for all currencies and you look at the GBP "line" - it is comparing GBP to USD/AUD/NZD/JPY/CHF/EUR to get the GBP strength. If, for example, you have omitted GBPNZD from the list of currencies as you don't trade it then it will just compare GBP to USD/AUD/JPY/CHF/EUR so of course the line and strength will be different.
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"The key to converting something useful to others is simplicity. Complexity is the enemy to execution." Tony Robbins
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10.7 CSS

Post by nanningbob »

CSS 24 pairs compared.
"AUDCAD,AUDCHF,AUDJPY,AUDNZD,AUDUSD,CADJPY,CHFJPY,EURAUD,EURCAD,EURJPY,EURNZD,EURUSD,
GBPAUD,GBPCAD,GBPCHF,GBPJPY,GBPNZD,GBPUSD,NZDCHF,NZDJPY,NZDUSD,USDCAD,USDCHF,USDJPY"

CSS 12 pairs compared

"AUDCHF,AUDJPY,AUDUSD,CADJPY,EURCAD,EURUSD,GBPCAD,GBPCHF,GBPNZD,GBPUSD,NZDJPY,NZDUSD,"

PICS BELOW ARE THE 12 PAIR SCREENS
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"The key to converting something useful to others is simplicity. Complexity is the enemy to execution." Tony Robbins
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10.7 CSS

Post by nanningbob »

Short version of the rules for CSS are found on the info page.
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10.7 CSS

Post by nanningbob »

So how does the CSS work? First we take the indicator TMA and we measure angle of increase or decrease. As price goes up the angle goes up, as price goes down its angle goes down. We measure this angle and the more the angle the more powerful the move is. So we measure the strength or weakness of a currency by the angle. A no angle would be 0 meaning price is not going anywhere but in an up and down motion. A positive angle means price overall is going up, a negative angle means price is going down. The higher the number the faster overall price is going up; the lower the number the slower price is going up. Unlike other indicators that measure price action when the lines begin to move back to 0 it does not mean it is reversing. It means its angle of increase is slowing down. That means price is still moving up just at a slower speed.

When we first used this we came up with a slope indicator and measured the weakness and strength of the 2 currencies on the screen. We called this the slope. Slope going up price is increasing slope going down, the rate of increase is slowing, crossing the 0 line was the reversal point of trend direction.

Then we came up with the idea of if we measured all the slopes of the currency pairs, we could come up with one line representing the overall move of a specific currency. For example if we took the slopes of the gbp/aud, gbp/cad, gbp/chf; gbp/jpy, gbp/usd, gbp/nzd, and eur/gbp; added up their slope angle numbers and divide by 7 we had one line representing the overall strength of that currency. We did this with each one and we ended up with a screen that looks like this.

Below is a screen of the typical TMA for one currency pair and the final product of the CSS info page. The CSS also does not use the same angle percentages of the TMA but were more reactive or faster than the TMA so the lines would react faster. Since this was an average of many lines we needed each line to react faster than the traditional TMA indicator.
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"The key to converting something useful to others is simplicity. Complexity is the enemy to execution." Tony Robbins
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10.7 CSS

Post by nanningbob »

I like to use the analysis of a car at a stop sign in describing how CSS lines work. It is at 0, as it moves forward the TMA begins to slightly angle up, .01, .03, .05. Price is beginning to move up and the highs are starting to get higher and the lows start to get higher. It continues to accelrate until it reaches the .20 line which is a critical point. When it crosses this line the pair in question begins to trend nicely and accelerate. This is a signal to trade and stay with a trade. Just like cars do not just go +25 MPH/KPH into reverse and then backwards -25 KPH neither does price. (unless someone drops an H-bomb somewhere and then you wont need to worry about FOREX trading for a while anyway). Just like cars speed up and slow down, so do currency pairs. When a line for a currency reaches the top. It is the fastest car (currency) and price will be going up on its pairs against the others. When it decelerates its positive/negative increase then other currencies can pass it up and you can see the change of direction on each pair as the lines cross. I will be using this car analogy throughout my explanations. First lets study the AUD since it has been the king (strongest) currency for the last 3 weeks.

NOTE: (Slope line indicators are different than the CSS indicator in that slope line indis (there are several variations on the market, some using MAs, CCI, or some other based indicator) compare the slope up but when they change direction they indicate change of direction or a reversal. CSS does not do that, CSS groups the entire group of pairs and when it reverses direction and the angle changes that does not neccessarily mean trend change but a slowing down of the increase/decrease of price movement. Change of overall direction happens at the 0 line) For example MACD histograms represent the angle of two MAs comparing their angles. When they cross its a trend direction change. However by the time they cross it is because trend direction has already happened. When CSS reaches 0 that means it is no longer increasing/decreasing its angle so trend direction happens at that point. The beauty of the indi is you can see it coming before it actually happens.
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10.7 CSS

Post by nanningbob »

The AUD began its march up the CSS around March 3 where it bottomed out. The only currency weaker than the AUD was the CAD and the CAD has remained weaker the whole time. So we compare price action of the aud and cad first. The AUD stayed ahead of the CAD all month and continues to this day.

After March 25 the CAD begins accelerating at a faster rate then the AUD and price action goes into more of a range mode. However since the AUD is still stronger than the CAD the pushes back up are more dynamic than the pushes back down. That is because even though the CAD is catching the AUD it is still behind it. So notice the range area but the AUD moves up quicker than its moves down. That is because despite the acceleration of the CAD it is still is not going as fast as the AUD so the AUD moves up will be greater than the CAD move down.

However that can change soon as the CAD accelerates and the AUD begins to decelerate. The CAD will then cross the AUD and be the stronger currency.

So we see in our read of the CSS two reads here.

#1 when one currency is stronger than another currency the stronger currency's price action will be up.
#2 When 2 currencies run parallel to each other up/down/ or flat they will range but the stronger currency will have the stronger moves

NOTE: It is important to notice that even though AUD is angling down it still is stronger than the CAD so we saw one more good push up. AUD dies hard
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10.7 CSS

Post by nanningbob »

CSS is far from over guys. I moved a post back to 10.7 thread and deleted others.

The second currency comparison is between the aud/jpy. As the aud move up the jpy has 3 movements and you can see the difference in price reaction on a screen.

1. First move is the jpy moving down while the aud is going up and there is a cross.
2. jpy moves up and is parallel with the aud but the aud is stronger.
3. jpy moves down again and aud/jpy are heading in separate directions.

I highlighted these areas for you.
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10.7 CSS

Post by nanningbob »

1. jpy has decelerated past the stop sign, 0 line, and its deceleration is increasing. The aud is decelerating and approaching the stop sign, 0 line, as they cross and one car passes the other going in opposite directions there is a nice move. This often happens when two currencies cross lines and are not at the 0 line. They whiz by quickly and there usually is a nice move.

2A. A there is a period of a week in which the aud does not angle and the jpy begins its turn up. The aud being flat but still below 0 and the jpy deceleration changing gives it a nice retrace week.

2B. You will notice that even though the 2 lines are parallel during this period the aud steadily inclines over the jpy. This is because the jpy is still below 0 and even though its line is moving up it is decelerating not accelerating. In other words as a car it is approaching the stop sign which is 0. The aud is accelerating and going faster. So the result is aud will move up and it did at a steady pace. Nothing spectacular here but a steady increase in price over several weeks.

3. This leads to the jpy hitting the stop sign and beginning to decelerating again. Since it is just leaving the stop sign this move is slow and not much action. Meanwhile the aud has hit its top speed and is cruising. Even though the aud is at a nice speed price action is weak this week so price moves gently in a range.

NOTE: though the CSS gives the general strength of each currency pair it does not predict volatility in the market. Just if there is volatility, you will know where the action will be in the different charts. However if the market is not volatile the indi just tells you who is weak and who is strong not how much the market will move.
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10.7 CSS

Post by nanningbob »

AUD/USD The first half of March these both switch back and forth and in the middle of the month they switch again with the aud going up and usd going down. This is the perfect trend move, lines going in opposite directions.
3. When CSS lines cross back and forth with each other price will trend but the moves may still be good.
4. When two lines cross and are angling in opposite direction you have your best trend moves.
4A. When two lines cross and are angling in opposite directions and one goes +20 and the other line goes -20 you have your biggest trend moves.
4B. When two lines cross and they cross outside the +20 or outside the -20 you will have good moves because they both are traveling fast.
4C. When both lines cross and they are inside the +20/-20 area they are both just starting to accelerate in their new directions. They are just leaving the stop sign and beginning to move. This can result in a choppy move but starting to angle into the more powerful direction of the currency that is on the + side. As each accelerates and moves away from the stop sign ( 0 line) the trend direction becomes more defined and the move becomes greater. Notice the strong blue UT as the lines move away from the 0 line.

I made the USD line bigger pink and the AUD line yellow so you could follow the lines easier.
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"The key to converting something useful to others is simplicity. Complexity is the enemy to execution." Tony Robbins
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