USD Strength

Place your new trading idea here to see if someone can automate it.
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gman07
Posts: 3
Joined: Thu Jun 07, 2012 6:24 am

USD Strength

Post by gman07 »

Possible to automate? Its an easy question but not so easy to code.

There are many methods/attempts to extract currency strength and trade a basket based on it, but I dont believe Empty4 provides the best foundation for it (unless you throw everything at it including the kitchen sink). A decent USD index is not available via current Empty4 based brokers. At least I havent seen or know of one that is same as the attached. And thats the challenge.

Attached is a 4hr chart of USD index with RSI crossing MA. I used another charting software. MA is red. Chart is connected to a US exchange.
USindexChart.jpg
Basically, when RSI crosses MA down on the index chart, in Empty4 sell basket of USD. When crosses up, buy USD basket. I use 4h chart as it gives enough time for the FX pairs to level out. However for shorter term basket in and out, although not tested by me... yet, I would say 1hr index chart would still be profitable. I also use D1 tf for the index chart.

Trading H4 on 5 USD pairs using 0.5 lot size (for instance) for each pair.
Trading D1 on 5 USD pairs I would use 1.0 lot size for each pair. Lot sizing can be varied to your liking. These are just my preferences and risk appetite. I may start to test trading both TF's at the same time, ie use 0.5 lots on H4 crosses and 1.0 lots on D1 crosses.

Look at the US index chart attached, then go to the 4hr Empty4 charts of the USD pairs for the same time. You will see the correlation.

Also attached is my manual trades for a period of 4 weeks on a demo of 50k account using 0.5 lots. In the 4 week period, I never closed a negative basket. Highest DD was 8%. Pairs traded were USD vs AUD,GBP,CHF,EUR,JPY,CAD and gold. I didnt have a TP but chose to manually close the basket when I was happy with the total balance.
myfxbook.jpg
12% return for the month

Of course the EA (if feasible) would have the usual MM and so forth. I'm sure this can be further enhanced, filtered and whatever else that can be thrown at it such as slope value.

Any feedback would be appreciated.

Thanks.
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garyfritz

Re: USD Strength

Post by garyfritz »

How did you avoid any losing baskets? Looks to me like there were plenty of cases where, if you held the basket until the RSI crossed again, you'd have had a loss. E.g. any time it told you to go long in that big down move from 9/5 to 9/14, those would have lost. Did you close them quickly when the signal was fighting a strong trend?

It's possible to construct a pretty decent USD index by combining all the USD pairs. Several of Baluda's and Neotrader's indicators do this.
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gman07
Posts: 3
Joined: Thu Jun 07, 2012 6:24 am

Re: USD Strength

Post by gman07 »

I'm not saying that this system wont have losing baskets. It just happens that in the period I traded it manually I didnt encounter any. What happens is right at the cross, I place the trades via a script. The balance swayed up and down positive and negative several times.

So if I wait until the next candle or the 3rd candle and see that its not going anywhere, I close the basket and wait for the next cross. But since the balance was up and down, and I chose to close the basket, I did it when in profit but without the aim of only exiting in profit, it was more so B/E. Of course it could have been a neg basket when I closed it coz that will happen, but filtering it for ranging market would increase number of profitable trades.

The index would most probably be best used as a confirmation or trigger. Since its already a weighted average of basket of currencies vs USD from the exchange. I figured it would be a reliable source. I have toyed with Baluda's indicator but admittedly not enough or demo traded with it. But I will do so for comparison.
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