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Forex Pair Strength

Discussion in 'Forex Forum' started by roel13, Aug 5, 2015.

  1. roel13

    roel13 Guest

    Consider we have the pair strength of 5 currencies. From -10 to +10 for Daily (d), Weekly (w), Monthly (m) and Yearly (y). Output numbers are based on analyzing pairs with these currencies for strength (using any method).

    Now, we could trade daily changes. For example, AUD jumps from -5 to -2 & EUR jumps from +8 to +3. Thus, buy AUD (even though it still has lower strength, but it's clearly growing) and sell EUR (idem, reverse) may be one trade to consider: in other words, long AUDEUR or short EURAUD (whichever of those two pairs is available - it's just an example).

    But, we also have weekly, monthly and yearly strength stats available. If we had looked at the yearly, we may have found that EUR is +9 for example for the year, i.e. very strong, and thus maybe shorting the EUR may not be the best trade, at least not if we consider things very-long-term. Then again, in general a year-period is very long, so we're going to miss out on those many reversals.

    So what about the weekly and monthly? Yes, maybe these will provide some extra information, but then the weekly rating is only a representation of 1 week (1/52 of a year), and the month 1/12 - hardly a "correct pair strength" we can rely our trades on.

    How to figure out a "correct/true pair strength" based on weekly, monthly and yearly strength values which can be used in combination with trading daily changes? Anyone with smart ideas?

    Source.
     

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