FX Index Analyzer Pro

 

The FX AlgoTrader FX Index Analyzer Pro package provides near real-time full timeframe FX index data for Forex Traders. The data is calculated by the FX AlgoTrader server based on LiteForex Index formulae.

Why is Index Analysis important for forex traders?

 

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

By comparing index data for all the forex 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 currency strength analysis or metering tool!

 

Where does the index data come from?

 

The index data is calculated using LFX currency index formulae published by the LiteForex brokerage service. The Index data is calculated in real time from spot FX rates on the FX AlgoTrader server and streamed to the subscriber on their local machine. Update frequencies are approximately every 10 seconds.

Index Data Table

The screenshot above shows near real-time index data by timeframe for each currency. Table cells with a blue background represent positive index values (strength) and table cells with a red background represent negative index values (weakness).

It's very important to understand the way the index data changes based on timeframe as this will help to define sensible filter criteria. Each timeframe is based on MT4 timeframe data ie M1 index data is based on 1 minute MT4 chart data. M5 index data is based on 5 minute MT4 chart data etc etc.. Therefore at the start of each 5 minute period the M1 and M5 index data will have the same value for the first minute of the new 5 minute period.

M1 and M5 Index data read the same value at the start of a new 5 minute period. This will happen a XX:00,XX:05,XX:10,XX:15 etc etc

A minute later (at XX:01,XX:06,XX:11,XX:16 etc etc) we see the M1 and M5 index data are no longer the same as there is a new M1 period and the M5 period is still building / forming /incomplete

The same behaviour will be displayed throughout all the timeframes. For example at the start of a new H1 period eg 09:00 GMT all lower timeframes will show the same index data. At 9:01 the M1 index data will be different to M5, M15,M30 and H1. At 09:05 M1 and M5 will be different to M15,M30 and H1.. at 09:15 M1,M5 and M15 will be different to M30 and H1 and so on...

Graphical Historical Index Analysis

The trader has the option to analyse historical index data by timeframe and look back period. Here the trader is analysing the weekly index data for AUD, NZD and CHF pairs over 3000 sample periods (hours)
Graphical index analysis can provide exceptional medium/long term trade opportunities by pairing strengthening currencies against weakening currencies. During testing several hundred pip plus medium term trades were identified using graphical historic index analysis.

Significant differential between AUD and NZD historical index data. This analysis has echoes of a pairs trade / arb for two generally highly correlated currencies (note... currencies not currency pairs)

Two 1 lot long positions opened for AUDUSD and and AUDNZD on 02/03/2021 and 03/02/2021 respectively achieved pip based profits of 114 and 182 respectively ($1485.75 AUD $1692.74 AUD based on 1 lot positions each) Trades were inadvertently auto closed by a risk controller during testing but paper based profits were actually significantly higher at various points during the trade as shown in the screenshot below for AUDNZD

Automated FX Index Strength & Weakness Analysis

 

Index data auto sorted into strength and weakness order by timeframe. The timeframes those used as standard in MetaTrader 4

Trend Filters allow the trader to set up custom depth filters accross multiple timeframes

Applied filters shown on the strength and weakness table. The M30 timeframe has a red background on the strongest and weakest currency as it's been set as the 'Alert Timeframe' in the Alert Controls and AutoTrading section.

How does the filter system work in the FX Index Analyzer Pro package?

Long and Short Candidate Pools

The screenshot above shows the Long and Short candidate pool area. The Trend Filters control the depth of the filter for each timeframe within the selection pool. The minimum filter depth is 1 and the maximum is 3.

Here we can see the H4 trend filter has been set to a value of 1 so the weakest and strongest positions are highlit with a grey background in the H4 column of Long and Short selection pools in the Strength/Weakness table

Here we can see the H4 trend filter has been set to a value of 2 so the two weakest and two strongest positions are highlit with a grey background in the H4 column of Long and Short selection pools in the Strength/Weakness table

Qualifying Filtered Currencies

In order for a currency to meet the filter criteria it must appear in all of the selected filter timeframes in the Long or Short candicate pool respectively

In the screeenshot above we can see GBP is within all of the active filter timeframes in the Long Candidate Pool

GBP displaying in Qualifying Filtered Currencies under the 'Long' category due to GBP being in all of the active filter timeframes in the Long Candidate Pool

Filter Types

Index Analyzer Pro has two filter types which are: "Follow" and "Buy Dip / Sell Rally"

The 'Follow' filter type

If we look in the Qualifying Filtered Currencies section of the program (bottom right of screenshot) we can see JPY is in the Short category and NZD and AUD are in the Long category. If we examine the Strength/Weakness table (top left of screenshot) we can see JPY (circled in blue) is in all of our filter critera in the Short Candidate Pool and similarly AUD (circled in black) and NZD (circled in red) meet all of our filters in the Long Candidate Pool
The system then creates an alert for pair combinations made up using this data which we can observe in the screenshot below

The Alert History window shows two "Long" alerts triggered at 13:50 for AUDJPY and NZDJPY. The system features a module called 'Pair Maker' which constructs forex pairs based on the data in the Qualified Filtered Currencies section

The 'Buy Dip/Sell Rally' filter type

The 'Buy Dip/Sell Rally' filter type is designed to pinpoint dip buying / rally selling opportunities. For a currency to qualify as a Short candidate the currency must be all grey filter zone within the Short Candidate Pool and also in the red filter zone within the Long Candidate pool. In the screenshot above we can see CHF meets this requirement and has therefore been added to the Qualifying Filtered Currencies section as a 'Short' candidate.

Similarly, for a currency to qualify as a Long candidate the currency must be all grey filter zone within the Long Candidate Pool and also in the red filter zone within the Short Candidate pool. In the screenshot above we can see GBP is in the M15 and W1 filter zones but not in the MN1 filter zone. Therefore it does not qualify as a 'Long' candidate as it doens't meet all of the filter criteria.

Profiles

Traders can create pre-defined profiles for the system and apply them quickly and easily using the 'Load Profile' button. Profiles can be created at any time with ease by clicking the 'Save Profile' button which will load a Windows Explorer session prompting for a profile name

MetaTrader 4 AutoTrading Option

For traders wishing to autotrade the signals created by Index Analyzer Pro we provide an optional MT4 Expert Advsior which has been developed as a 'listener' to detect and execute Index Analyzer Pro trading signals. The MT4 EA is called 'FXA - Index Analyzer Pro AutoTrade EA' and is designed to be run on a single chart in MT4. The EA should be loaded onto a high volatility forex pair as the EA is triggered from MT4 tick data.

List of EA Parameters and descriptions

 

Benefits of Index Analyzer Pro

Pricing