Long Term CICR (Cross index currency ref) trading
Hello fellow foreign exchange factories!
I am The originator of this system and all credit must go to Capito for finding great ways to find strengths and weaknesses from these forums. His post is in the business forum, but his site now offers free membership so I thought I'd post the trading method here. You can also visit the Forexmechanics.com website
First .. How the Market Moves Since the Forex market offers currency pairs, you can trade the strength/weakness of one currency against the strength/weakness of another currency. If they (the currencies themselves) move in opposite directions, we have a trend.
Secondly , you won't know the actual direction of a currency pair unless you track both currencies individually. This is where it comes in handy, The broker that offers these individual currency indices (at least as far as I know) is LiteForex 's sigtrader 4. Download the platform at liteforex.com Open the market window and click "Show All". These individual currency indices are marked with a suffix (LFX stands for liteforex), such as USDLFX, GBPLFX, etc.
The idea is to match strong/weak currencies with currencies that move in the opposite direction. This gives the pair a close to 90% chance of making a profit. As I write this I have shorted most GBP pairs and they are all in profit and currently up 800 pips with more downside as their counter currencies rise...eg NZDLFX and USDLFX.
The best time to trade is within the first 10 days, as the most important currency news releases occur during this time period.
If you see a strong move, the average trade lasts 3-15 days or longer.
Once a currency index crosses our filter line, you want to find another index that is in the opposite direction to the one you are trading in (within the first 10 days) and let it run for at least 3 days. The market is volatile 80% of the time, so it takes time to actually make a profit, and trading takes at least 72 hours to see if your initial position was correct.
Enter the system <br> Here is a screenshot of our index. We apply a custom MACD to look for divergences and MACD crossovers. There is also a series of Laguerre filters with a gamma setting of 0.7. The price crosses the 14 EMA to find the correct trading index. There is also a trend display for all timeframes up to monthly (yes, monthly candles are very important!!), which is based on the basic 3 RSI. Monthly support/resistance pivots. Last but not least is the Danish Trendline indicator (we will discuss this indicator later)
This is the GBP Index so far in December. (Pay attention to the cross on December 7th)
http://img560.imageshack.us/img560/8834/cicr1.png
Now here is the picture of AUDLFX (Australian Dollar Index) following the December 8th cross http://img85.imageshack.us/img85/9696/cicr3.png
Now we have two currencies moving in opposite directions... Let's see what happens to GBPAUD when pairing these indices together
http://img707.imageshack.us/img707/4084/cicr5.png
I want you to note that this is not even a prime example of how to trade these indices. Bigger moves are happening, but I've spent a lot of time posting this method here so don't have much time to scan the charts.
Download the template + indicators below:
Place the config files (all in one) folder into the sigtrader config file and you will get all indexes on separate tabs as shown below.
http://img39.imageshack.us/img39/9382/cicr6.png
Stay tuned for more content
I am The originator of this system and all credit must go to Capito for finding great ways to find strengths and weaknesses from these forums. His post is in the business forum, but his site now offers free membership so I thought I'd post the trading method here. You can also visit the Forexmechanics.com website
First .. How the Market Moves Since the Forex market offers currency pairs, you can trade the strength/weakness of one currency against the strength/weakness of another currency. If they (the currencies themselves) move in opposite directions, we have a trend.
Secondly , you won't know the actual direction of a currency pair unless you track both currencies individually. This is where it comes in handy, The broker that offers these individual currency indices (at least as far as I know) is LiteForex 's sigtrader 4. Download the platform at liteforex.com Open the market window and click "Show All". These individual currency indices are marked with a suffix (LFX stands for liteforex), such as USDLFX, GBPLFX, etc.
The idea is to match strong/weak currencies with currencies that move in the opposite direction. This gives the pair a close to 90% chance of making a profit. As I write this I have shorted most GBP pairs and they are all in profit and currently up 800 pips with more downside as their counter currencies rise...eg NZDLFX and USDLFX.
The best time to trade is within the first 10 days, as the most important currency news releases occur during this time period.
If you see a strong move, the average trade lasts 3-15 days or longer.
Once a currency index crosses our filter line, you want to find another index that is in the opposite direction to the one you are trading in (within the first 10 days) and let it run for at least 3 days. The market is volatile 80% of the time, so it takes time to actually make a profit, and trading takes at least 72 hours to see if your initial position was correct.
Enter the system <br> Here is a screenshot of our index. We apply a custom MACD to look for divergences and MACD crossovers. There is also a series of Laguerre filters with a gamma setting of 0.7. The price crosses the 14 EMA to find the correct trading index. There is also a trend display for all timeframes up to monthly (yes, monthly candles are very important!!), which is based on the basic 3 RSI. Monthly support/resistance pivots. Last but not least is the Danish Trendline indicator (we will discuss this indicator later)
This is the GBP Index so far in December. (Pay attention to the cross on December 7th)
http://img560.imageshack.us/img560/8834/cicr1.png
Now here is the picture of AUDLFX (Australian Dollar Index) following the December 8th cross http://img85.imageshack.us/img85/9696/cicr3.png
Now we have two currencies moving in opposite directions... Let's see what happens to GBPAUD when pairing these indices together
http://img707.imageshack.us/img707/4084/cicr5.png
I want you to note that this is not even a prime example of how to trade these indices. Bigger moves are happening, but I've spent a lot of time posting this method here so don't have much time to scan the charts.
Download the template + indicators below:
Place the config files (all in one) folder into the sigtrader config file and you will get all indexes on separate tabs as shown below.
http://img39.imageshack.us/img39/9382/cicr6.png
Stay tuned for more content
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