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FX Index Analysis Tool

 

Demo of FX Index Analysis System

 

Overview

 

The FX AlgoTrader Forex Index Analyzer provides real time currency index data direct to the trader's computer. The Analyzer is a Java based platform independent product which means it can be used with any windows application as it always sits on top of open windows applications. The Index Analyzer is an excellent way to monitor the forex market while working on other non forex projects.

FX Index Analyzer Main Interface


Why is Index Analysis so powerful?

 

Currency index analysis provides traders with a unique ability to analyse the forex market from a macro level rather than analysing individual forex pairs.

By comparing the index data for all the major currencies over multiple timeframes traders are able to make accurate, quick and informed decisions regarding the best pairs to trade. No serious forex trader should be without some form of forex index analysis tool!

 

Where does the data come from and how is it calculated?

 

The data which the analyzer uses comes from the FX AlgoTrader web server. The index data is calculated using the LFX currency index formulae which was published by the LiteForex brokerage service up until 2014. The Index data is calculated in real time from spot FX rates and streamed to the subscriber on their local machine.

 

Strength and Weakness, Filters and Alerts

 

The currency index analyzer incorporates multi-timeframe filters which allow traders to see index data sorted into strength and weakness order by timeframe. Traders can also set filters for each timeframe so that they receive alerts when currencies fall within custom filter criteria.

 

FX Index Analyzer Filters

 

How does the filter system work?

 

In the screenshot above we can see the Monthly (MN1) row has a red background - this means it isn't included in the filter criteria. We can also see boxes with a green background on the Weekly (W1), Daily (D1), 4 hourly (H4) and hourly (H1), this represents our active filter area.

To understand how the filter system works you need to know the difference between a 'currency' and a 'currency pair'. A 'currency' is a singular entity such as the Euro (EUR) or Sterling (GBP) whereas a 'currency pair' is made up of two 'currencies' eg EURGBP which represents... the Euro/Sterling exchange rate. 

For the index analyzer to trigger an alert a currency pair must fall within the green shaded areas.......the weakest currency must fall into all the active filter timeframes in the weak zone (the left hand side) and the strongest currency must fall into all the actve filter timeframes in the strong zone (the right hand side)... The index data is sorted in real time into strength and weakness order where the strongest currencies are on the right hand side and the weakest are on the left hand side.

So in the screenshot below we can see GBP falls into all the active filter zone in the weakest currency area (the left hand side) and the USD falls into all the active filter zone for the strongest currencies (the right hand side). Therefore the GBPUSD is the ideal pair to short.

 

 

When currencies meet the filter criteria the index analyzer produces an alerts with an corresponding trigger time which is displayed in the Alerts table as shown below.

 

FX Index Analyzer Candidates

 

The Index Analyzer now has an Yahoo email alert facility where any alerts sent to the Alert trigger table are also sent to the trader's designated Yahoo account. You can set up a Yahoo mail account for free anytime.


 

Features

 

100% Trading Platform Independent - the Analyzer can sit on top of any Windows based applications - it is always visible.

 

FX Index Analyzer

Analyer on top of Outlook

FX Index Analyzer

Analyzer on top of Word

FX Index Analyzer

Analyzer on top of MetaTrader 4

FX Index Analyzer

Analyzer displayed on multiple monitor set up


Multi-Timeframe Real-Time Index Gain Comparison Matrix
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a macro level snapshot of the whole forex market

 

FX Index Analyzer Gain



Multi-Timeframe Index Gain Matrix

Colour coded gain indications - Red Cells indicate a negative index value, blue cells a positive index value and white cells represent no change. Color coded cells help traders see what's hot and what's not!

FX Index Analyer Colours

 

Real-Time Strength / Weakness Table to assist with optimized pair selection

 

Filters

Currencies auto-sorted into strength order for each timeframe

 

Multi-Timemframe Filters - allow the trader to tune the system to meet their own trading style


FX Index Analyzer Filters

Day Trader Settings - The screenshot above shows a potential filter set up for day traders. The trader has excluded the Monthly and Weekly Index data so that the active filters are only based on the Daily, 4 Hourly and Hourly timeframes. Using shorter timeframe filters allows the trader to take advantage of short duration trend changes/reversals etc but the trader should also factor in the long term trend and ensure their exit projections are before any significant price reaction points which could be price derived or technical support or resistance levels.

 

 

Position Trader Settings - The screenshot above is using 4 timeframes for the active filter zone. Here the trader is essentially asking the system to produce index based alerts when a currency pair satisfies the following conditions:-


Strongest currency must be in the top three strongest for the month and week
Weakest currency must be in the weakest three for the month and week
Strongest currency must be the strongest on the day
Weakest currency must be the weakest on the day
Strongest currency must be in the top two strongest currencies in the last 4 hours
Weakest currency must be in the weakest two currencies in the last 4 hours
Strongest and weakest currencies can be in any position within the last hour

The reason the trader excluded the hourly timeframe is very deliberate - using the system in this way allows the trader to take opportunity of short term hourly reversals where price action retests support or resistance levels in a strong trend.. aka 'buying a dip in an uptrend and 'selling a rally' in a downtrend.

 

Generated real-time candidate list with trade direction and trigger time

FX Index Analyzer Candidates

Potential Trading Candidates

 

Index History Logging

 

This is a brand new feature which provides real time data logging on all time frames. The system saves index data at a trader defined interval. This allows the trader to see how the currency index data is changing over time on the specific timeframe of choice. This new option gives the trader historical context when analysing real time index data for trading decisions. This is a very powerful new feature.

Traders will note how the currency index data moves on the hourly timeframe. At the time of writing the USD shows strength accross the board but we note a momentary weakness on the USD where it moves from the strongest currency to the 7th strongest on the day... this represents a dip buying opportunity. In the same way we see GBP languishing as the weakest currency on the day and a momentary rally propels it to the third strongest...

 

Analysing the GBPUSD shows this being played out by price.

 

Videos

 

 

Analyzer in use 5th June 2014

 

Analyzer in use 4th June 2014

 

Analyzer in use 3rd June 2014


Analyzer in use 2nd June 2014

 

Analyzer in use 29th May 2014

 

Benefits


Complete platform independence Traders do not need to have a trading platform open - they can use the analyzer in conjunction with any Windows application. This is invaluable for part time traders with regular jobs
An index based analysis of the market Traders can easily compare major currencies against each other without having to use an individual pair based approach. This allows a macro perspective of the market as it is easy to see broad based strength in one currency vs weakness in another
Index Gain rankings The currency index analyzer automatically sorts currencies by their strength/weakness over H1,H4,D1 and MN1 timefranes. This allows traders to easily see which currencies are strengthening/weakening in relation to each other and over what timeframe
Automatic selection of Forex pairs which meet trader defined filter requirements The trader is provided with a list of forex pairs which satisfy the filter requirements (defined by the trader using filters). This means trades will generally have market flow on their side as traders naturally align themelves to market flow and trend. If you buy the strongest and sell the weakest pairs the odds of the trade having a positive outcome improve significantly
Email Alerts The newest release of the Index Analyzer has automated email alerts so traders can be assured they will always be alerted when the appropriate conditions in the market which meet their custom filter requirements occur.

 

Supporting Products:


FX AlgoTrader Pivot Systems would allow the trader to refine their entry and exit plans for forex pair candidates generates by the FX Index Analyzer.

 

Pricing

 

FX Index Analysis for Optimum Pair Selection Monthly Subscription License (no contract lock in)
Licensing Details
£9.95 GBP/month