Heres an great conversation i'm having with a trader on thenew Fix Start indicator available here for a small donation to a Covid charity !
https://uk.virginmoneygiving.com/FXCorrelator
Hi Neil,
Thanks for clarifying all that.
OK I think I understand the two things out of your emails:
(1) The FXCorrelator MAs, either the 20 or 7 period can be used as one of the signals to entry trades. Previously though, before Fixstart, the FXcorrelator indicator was used to determine whether the currency is in the bull or bear side, but now you use Fixstart indicator for that?
The original ma Fxcorrelator is a rolling indicator that never has a start date,,,,,that’s why it’s so powerful......you look at indicator and based on the settings you always know what indicator is bull..what is bear and their relative strengths ...
the fixstart has a slightly different purpose but jn effect does the same thing.....the way I use it is that as soon as a currency is displaying significant bull or bear direction I can trade it in that direction......based in its relativity to other currencies .....the difference between the 2 is that i can be much more exact with my fixstart.......and I need that for scalping .....remember the fixstart is pretty much accurate to a few pips whereas the fxcorrelator is. It pip based in its read outs .....just relative strength....
(2) The start date/time for Fixstart should be as close as possible to the time frame you are trading. This means when switching to 5 minute and daily charts, the FixStart must be adjusted to be close to the chosen time frame to be relevant. As per your London 6 AM GMT on the 5 minute, your FixStart would be may an hour or two before 6AM rather than days before. I keep switching between higher and lower timeframes, so I just have to keep that in mind to readjust the start date/time.
The principles behind the fixstart indicator are not that different to using it on a normal pair.......so perhaps that helps in framing the answer......let’s say you were looking at a clean pairchart....say gbpusd on a daily chart......my first question is ....is the price bull or bear ?....is there a trend ?
How do you measure it ?
No matter how you look at it your eyes are automatically seeking several reference points ....and that inevitably leads you to self fit a trend line ......leading to an oldest bar in the chart ....whether you like it or not you will identify a start bar in your definition of bull or bear......unless you decide its ranging .......
Using Fibonacci is probably the simplest example .....a fib always needs a reference start. Point ......so that’s what you would use as the start on a normal chart ....for fixstart......and you have then determined the size of the bull or bear move in the process.....
If you used the example above on fixstart you are actually going more into the next level of using the indicator that I haven’t covered yet .....EVENT BASED SIGNALS.....thats where you ignore traditional start times .....like the first bar of a weeks trading .....or 6am to determine the start of European session (or around that time)......or the start of each month or year for daily timeframe etc etc.....
This is a fascinating process.....where generally a big event jn currencies or just one currency is then used to start off a new fixstart zero point to see what happens next and determine trends from that point and nothing else .....
As traders we are constantly seeking reference points to determine whether we can see a pattern or a trade opportunity .....and the reason we all do different things is because we are all looking at the market jn many different ways and also timeframes.......let’s say you decided to look back 50 bars on every timeframe .....it would be rare to see a net bull move in all charts from 1 min up to 1 day....because the only really timeframes that matter are the ones you trade in.....perhaps a higher one for main trend and the trigger one for confirming entry ....the rest dont matter
So in answer to your question .....use the fixstart however you want ....and to answer the question for you ....is my currency bull or bear ?.....what reference point is important to me ?....are there enough bars in the chart to date to make this relèvent for me ?.....are there now TOO MANY bars jn the chart to make this a clear picture and may be i need to seek a more recent reference point ......
It’s all subjective .....that’s why trading is such a difficult business.....so,find some rules and stick to them ...
Here’s another way of looking at it ......and how I trade daily sessions
1) ignore Asian session ....but be aware of anything significant that happened in session regarding currencies .....
2) start from 6am gmt for London session ......and let it percolate for at least an hour .......let the pip levels tell you what’s moving .....don’t really start biting on trends until currencies are breaching at least 10 pip levels bull or bear .......and then start taking scalps .....maybe !!....remember there’s plenty if time in a session ...don’t get rushed into silly trades.....that’s how people,lose lots of money ....be patient
3) post 11am market is drifting into limbo period pre us opens.....so unless big news is anticipated then market will slow down and London am session is over ..... now you have a dilemma .......let the fixstart keep,running into us session and trade the historical bulls and bears from London session ......OR fire up a new fixstart an hour if so before us Dow session opens ...so,around 8.30 EST or equiv GMT......
I generally have both running ......I can then see the markets moves relative to London open time ....but also the aggression of the fresh us dow open market .....
If i,am seeing a currency displaying bull in both that’s perfect.....no hesitation that I’m still trading it on pullbacks .....
If we are seeing strong conflicting directions ....then I will,stay out in that currency....I may take one trade or so to test it ...but otherwise why take risks ??? ...only use that currency as the secondary pairing against something that is giving consistant signals ...and you use the conflicting currency as a bull or bear based on its us open bias .....
Can you see how deep and fascinating this can get ?......
But step back and see how much depth and analysis you are now doing on the forex G8 market structure .....you are light years ahead of others who are looking at one favourite pair and blindly hitting a favourite pattern to trade.....crazy !!!
That’s why this gets traders so,much closer to being the 3% of traders who make consistent profits.....just add a solid entry signal and only take the best signals ...good money management , good exit strategy and patience and concentration.......and you will be a profitable trader .....over time
Hope this helps .....one answer can it fit all......trading is very subjective ....
I didn't quite get the ALPHA currency meaning. What makes a currency an alpha currency? Maybe you've covered it in a blog in the past. Just realised you have devoted so much effort in creating all this content for us. What a legend ;-) I saw USD and JPY being the two most bearish on the chart, but since JPY is even more bearish I would plot the JPY MA (7 period MA) and then look for other pairs in the bullish region to pair with JPY. One possibilty would be the EURJPY.
Alpha = most strongest or most weakest currencies the time .....so if yen is the strongest line in a fixstart or a ma based indicator ...it’s Alpha Bull .....if gbp is weakest in a chart it’s the alpha bear.......many times you get a couple that are close together so I generally group them together as joint alphas etc etc ....
You're right that the GBP is bullish, but that's from the 5 minute chart. The 1 hour chart shows GBP as strongly bearish. So my understanding is that depending on the timeframe, the strengths of the currencies would be different.
As already described .....you have to decide what timeframe you are trading ........markets are fractal .....and all work if you look hard enough.....
In the situation described above.....if you are trading 1hr charts as bearish and 5 mins are bullish ..... then there is probably a strong. Setup coming on 5 mins to resell into 1 hour trend......generally one uses a higher TF to determine the trend ..and a,lower TF to. Pull back and then trade back into the trend ......
You can do this 2 ways on the ma fxcorrelator .....
Use similar ma setting on 2 TFs.......so perhaps a 20 ma on a 5 min and a 20ma on a 1 hour ......or whatever setting you want .....eg 7ma in both ...whatever
Or use a fast ma and a slower ma in the same timeframe ....so in the above you could put a 20ma in a 5 min then have a 12 x 20 = 240 ma on another 5 min chart ....they are just about the same setting .... except the 5 min charts version gives more accuracy due to more bars being used vs the 1 hr TF chart ....
I hope this all helps ......my thread on the trade2win forum is now some 23,000 posts and has had over 2.5 million views .....it’s 11 years of discussions covering so many aspects of strengthmeter trading with some amazing traders contributing along the way ....so it’s crazy to ask people to read it all .....in the signature area of every post you can see some links ...these are to free indicators and important posts so I hope that helps ...
Most things I’ve done that I offer for free are here in my website so take a look around the menu and they are there ....give them a read and I hope you find it useful .....
I have promised to publish a book and a trading course one day .....but other work and my trading schedule make it hard to fit that in .....but I will do it .....I promise ! I have resisted this for many years as I see so many failed traders just selling expensive courses and not adding value ........and when I launch I want it to be useful to people ... https://www.trade2win.com/threads/correlation-trading-basic-ideas-strategies.71854/ Take care ....N