How to Create a "Trading Edge": Know the Strong and the Weak Currencies
by Richard Krivo
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In our live Trading Webinars we often refer to finding out which currencies are the strongest and which are the weakest. By making that determination we can pair the currencies so that we have a strong versus a weak or a weak versus a strong. By doing that we are creating a “trading edge” for ourselves. If we trade a currency pair in which both currencies are fairly equal in strength, we give up the edge because either currency can “take control” since they are of equal strength.
By matching up a strong with a weak, however, we can have a bit more confidence in knowing the direction of the likely move. Then, if we match the direction of that potential move with the direction of the trend on the Daily chart, we have a clear trading edge.
For example, currently the USDCHF pair is in a downtrend on the Daily chart. Based on a strong/weak analysis we see that the USD is weak and the CHF is strong. So selling that pair in the direction of the Daily trend is a higher probability trade.
Briefly, here is how I go about doing a strong/weak analysis…
I use a 4 hour chart with a 200 SMA on it. On a sheet of paper, a legal pad or an Excel spreadsheet, I list the currencies (not the pairs but the currencies themselves) in a vertical column. For example, EUR, USD, CHF, etc.
Now, let’s say the pair in question on the 4 hour chart is the EURUSD. If it is trading above the 200 SMA that means that the EUR is stronger than the USD at that point in time. I make a note of that next to the EUR and the USD in the vertical column…EUR gets an up arrow and the USD gets a down arrow. Then I go to the next currency and go through the same process. (All in all I bring up about 25 pairs on the charts each day before the open of the New York session and it takes less than 15 minutes.)
When I am done with the above process, I tally all the “up arrows ” and “down arrows” for the EUR against the other currencies and then I can tell where the EUR ranks strength-wise relative to each of them. For example, if the EUR has 5 up arrows and 2 down arrows and the JPY has 3 up arrows and 4 down arrows, that means that the EUR, overall, is stronger than the JPY. (It doesn’t get much more simple than that!) When I have all the currencies in which I am interested evaluated in this way, I then have an overview of how they all relate to each other based on strength/weakness.
Next, I match the strongest with the weakest and go to the charts and look for a technical reason, such as a break of support or resistance, to enter the trade in the direction of the trend. A pair that has a strong currency paired against a weak currency would be a candidate for a buy in a Daily uptrend. On the other hand, a weak paired against a strong would be a candidate for a sell in a Daily downtrend.
As far as the pairs that I personally look at, I run this analysis on all combinations of the following currencies: USD, EUR, GBP, JPY, AUD, NZD, CHF and CAD.
The process is very basic, straightforward and quite boring …b ut it works.
As a side benefit, while I am going through the process of checking the 4 hour chart on each pair, I really get a sense for what is going on in the market at the time. And that information serves me well as the trading day progresses.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Market Edge Daily
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Questions and Answers
I?ve been investing for more than 20 years and trading for almost 14, and I can tell you that if you want to make BIG and FAST profits, I recommend you trading rather than investing, trading can help you to go from rags to rich.
If you are investing, you must have already achieved some degree of financial success, long term stock investing and FOREX can help you become much richer than you are today.
My experiences as a Nasdaq Market Maker, Head trader of several brokerage firms, and currently as a professional trader and private hedge fund manager, I can suggest you that:
We trade because we want quick, short term profits on a consistent basis. We want to cash flow the market. Milk it like a cow.
Make consistent, small, short term gains rather than trying to hit a home run on every trade. Don't ever forget that.
Don't marry a stock, marry the idea of making money trading stocks. That's the only way to do it.
For me "All stocks are equally worthless”
I don't hold on to any illusion that the stock market will continue to go up and provide a nice retirement for me.
I could care less which way the market goes. It's irrelevant to me if the market goes higher, crashes or moves sideways for the next 50 years. I really could care less. Stocks are just four letters with two prices next to them that I use to make a living trading.
Trade ONLY when you have a clear, easy and identifiable advantage, because without a CLEAR EDGE your odds of success are NO better than a flip of a coin… That?s why so many new traders (and investors) lose money.
Take a look at any daily chart of any index or stock and you'll probably see the most volatility and the biggest opportunity for profit during the first Hour of the stock market's opening.
The popular thinking and conventional wisdom is that you should wait about an hour before you start trading.
But if you do, you'll miss the big, fast moves that stocks make as all the amateurs let their emotions out through their
online accounts, usually right after they read some news headline or hear Maria Bartiromo go off about a stock on CNBC.
It's easy to see why trading the open is the market's prime time for profiting from other online traders.
The market's open is very volatile – that is the perfect environment for LARGE, FAST profits.
Learn to trade as a professional Market Maker ,not as an emotionally driven amateur trader or investor with few thousand dollars in an account at Etrade.
There isn't any other time during the day or any stock you can invest in, that can make you 1, 2, 3, 5, 7 or more points
in minutes OTHER than during the first hour the stock market is open. That's why I love trading the open so much.
I trade only when I have an edge and that means "only the first hour the market is open".
If you are a beginning trader, you can give yourself an unfair advantage in the market trading this way.
I can carry on with the advises about how to make money trading, but if you ask me:
"What is the best thing you can do for me?
Give yourself a BIG favor and go to this "Top Secret" site and learn how to get the BEST stocks that will make the largest and fastest day trading profits you?ve ever seen, all by yourself…
After you review this site you won?t need system, strategy, book, software or mentor to tell you what to do,
you will be able to profit HUGE every day.
Good luck and good trading,
A successful network marketing business takes commitment and consistency on a daily basis. Based on my experience you need to be a good learner first and learn how to market effectively.
The old networking model is no longer effective- make a list of your top100 friends (warm market) and approach them first about your business. The sale funnel is way too short…call someone up, make your pitch, if they say no then that's it…done. The new model employs a blend of technology and leadership skills. It's very important to make deals with people not computers though. Use technology (auto responders, phone dialers etc.) to extend your sales funnel weeks and months into the future through effective follow up. It's not uncommon for a successful network marketer to have someone that contacted them anywhere from 1month to 12 months in the past joining their business. Effective networkers know how to market and extend the sales funnel. Think AOL, Walmart etc.
Learn from the big guns at the top of the food chain. They all control the content and build systems for their down lines which often times makes them more money than the business itself. Too many network marketing companies take away power instead of give power. What I mean by that is they don't teach people how to be business owners and earn off the entire sales funnel that is available to all networkers. Meaning, as a business owner you should be able to earn off of the sales of leads, autoresponders and training products. The guys at the top normally keep all of the power to themselves. The ability to transfer power to those you work with is essential. Once you become successful don't sugar coat the truth to those you work with. Let them know the whole story.
I also recommend a generic mastermind community to get involved with that you can plug into and learn cutting edge marketing techniques. Brand yourself first, be a self-promoter, sell people on YOU, inc. People want to partner with leaders that have a high emotional IQ. Having a great product is important, but it is more important to know how to brand yourself and learn how to get people to know, like and trust you.
Additionally, take the time to be a resource for people – be a business coach. As a business coach/trainer other people don't see you as competition and will instead see you as a resource that is offering empowering information to help them build their business. Offer training products and leads on the front end and later on back end people into your primary networking business. This not only builds strong relationships (through your retail training products), it lets you see who the leaders are going to be that you can potentially partner with.
Also study successful people and become good friends with them. One day with an uncommon mentor can take away a thousand days of pain and frustration. Make a point to read empowering literature (on marketing, personal development etc.) a little every day to maintain focus and keep your mindset strong.
I hope this helps!
My phone keeps going back and forth between edge and 3G an I need it to stick to 3G only. It's driving me crazy. Please help.
I foun some info for you man, I hope it helps:
For many people there are times we have to simply deal with the annoyance of switching from 3G to Edge almost daily (more unlucky users may switch many times a day). This is a fact of life for me, as I make a 160 mile round trip commute every day. Inevitably I will switch from 3G to Edge at least 3 times on my trip, which of course renders my apps nearly useless, especially high data use apps like Pandora or Sirius XM?. I found myself asking “why didn’t Apple include a setting to turn off one network or another like every other cell phone since digital phones came to market??” (This question has yet to be answered…)
All of the areas I drive through are covered by 3G (metro Houston area), and there is no reason that my phone could not stay in 3G. After some determination & google searching I have finally found a solution. (Note that I tried the “Edge” button in SBSettings, however it simply turns off ALL data, including 3G. My solution: edit the phone’s files to stop it from ever going to Edge!
What is required for the edit:
- A jailbroken iPhone
- SSH client (such as putty)
- OpenSSH installed on your iPhone (found in Cydia)
- Basic knowledge of command prompt/SSH use
What you will need to do:
- SSH to your phone logging in as “root” (password is usually alpine).
- Navigate to /var/wireless/Library/Preferences/
- Edit the file csidata (I use nano as my editor)
- Find the line that reads “GsmRegistrationModel::fRatSelection=0?1? & change it to GsmRegistrationModel::fRatSelection=0?2 (For those that need to know, 0?1 = 3G & Edge Data, 0?0 is Edge only, and 0?2 is 3G only)
- Save the file & reboot your phone!
Your iPhone 4 will now ONLY use the 3G network. Note, this will NOT allow you to use your data service if you are in an Edge only area (yes, they do still exist). I should also note that the entire process will need to be redone if you accidentally use SBSettings to turn your data settings on or off.
No more losing your music on Pandora or interrupting those torrents from downloading!