Updated: Jun 2
Every now and then entrepreneurs have the opportunity to leverage new technology.
The internet gave entrepreneurs a global reach in the late 90's.
Trading Forex gave entrepreneurs the freedom to operate their business on the road... and creating a massive opportunity for savvy entrepreneurs. I believe this is the most exciting time to be alive because it's never been easier to start a business or leverage your skills to create an additional income stream... And currency trading is leveling the playing field in a way we haven't seen since people started using the internet for e-commerce.
We'll go through the basics and see dozens of scenarios happening right now, and how a strict rule-based methodology can help you to be on the right side of the market trading with the big investors.
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Learn and apply a strict methodical rule based on Currency Strength strategy
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Learn how the markets works with only one chart
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Thousands of hours have been spent and many research to perfect these formulas and levels. It truly is our passion to develop new alternative trading strategies! To get verified statistics thousands of trades have been analyzed with automated forward testing.
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35 pip TP
35 pip SL
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A winning strategy
The 28Pairs Currency Strength Trading System - also known as Double-GAP Strategy - is our primary trading philosophy and is based on exploiting individual currency strength and weakness.
The principle idea is buying strength and selling weakness. This is a fundamental strategy for investors in all marketplaces. Most amateur retail traders in Forex either ignore this winning strategy or are unaware of it.
With this strategy, we look at individual currencies rather than currency pairs and then buy the strong currency and sell it against the weak currency. This will give your trading a real edge.
When we refer to the Market we mean THE 8 main currencies and the 28 FX pairs that are derived from those 8 currencies. The market has to be seen always in equilibrium. If one currency is bought some other(s) must be sold. This we could call her money flow. (We may use terms in a different way as they are used usually on this site). When we analyze the market we look at the whole market which to us is 8 currencies and 28 pairs. (Exotic pairs are not included for now.) When most traders look at a chart to find a trade setup they would need to check 28 charts to understand what the Forex market is doing. When you use the Currency-Strength28 strategy you only look at currencies, not pairs, and for that, we need to check only ONE CHART! Do you understand now the edge? So lets first have a look at the 8 main currencies which are:
US Dollar, Euro, Yen and Pound, these are the most important because they have the largest trading volume, then there are Swiss Franc, Australian, Canadian and New Zealand Dollars.
Each single currency belongs to a single economy. Some currencies are trending up some currencies are trending down, this information you can not see from a single pairs chart. For example: if the EURUSD pair is trending up you do not know why from looking at a single chart. Maybe the Euro is strong and the USD is flat or the Euro is flat and the USD is weak or even both are strong and the Euro is just stronger. Remember in any chart there are two currencies they are called the BASE and the QUOTE currency.
To maximize your wins and minimize your losses you need to know what an individual currency is doing in the context of the whole market. Staying with our EURUSD example: an EURUSD chart will show you only 1/28th of the market so you only have a small amount of information to base your trading decision on. Given that each currency can be paired with 7 other currencies you should be basing your trade decision on the information that all 14 pairs give you. By using the CStrength28 indicator you can get all that information from just the one chart. Now you may know all of that already but stay put we will add new kind of technical analyses!
The goal of the strategy is to find out the sentiment of the market and which pair is good to trade and which pair is not. As a trader, you should know if a currency is trending, consolidating or reversing as this will give you information on how to trade. Do we look for continuation or do we look for pullback/reversal? This is THE most important information you need to trade and this strategy will give you the answer!
1112 pips winner!
With 1 lot trade size, it will pay about $10 per pip depends slightly on the pair.
The CURRENCY GAP
Terms I will be using in this blog may be different from usual. CS=Currency Strength Line, GAP=(currency up or down), sGAP=single GAP, dGAP=double GAP, iGAP=inside GAP, oGAP=outside GAP, iDir=inside Direction, oDir=outside Direction, MaMom=Market Momentum, MFib=Market Fibonacci level. Now we will go to some examples for illustration. I prefer a graphical demonstration.
The Currency GAP is used for a move of single Currency (up or down after candle close for the last 2 or 3 bars in a defined angle)
sGAP or single GAP (CS weak against weaker) :
dGAP or double GAP (2x GAP in opposite direction) :
Definition of double-GAP how it is used here:
We need 2 separated Currency GAP's to get one double GAP: Example EURNZD: We check after a candle closed: Take the currency strength of EURO and compare it 2 candles back to get the EUR GAP Take the currency strength of NZD and compare it 2 candles back to get the NZD GAP
IF EUR GAP is down and NZD GAP is up = sell EURNZD
This is a double GAP!
The double-GAP (dGAP) is always a currency move in the opposite direction. It is the separated currency strength change of the base and the quote currency. The single GAP: After we have seen the double GAP (dGAP) we need also understand the simple GAP (sGAP) which is often used. It is the currency strength change between the base and the quote currency. A double GAP is always a simple GAP too but a simple GAP is not always a double GAP. A simple GAP can be: Currency A is weak and currency B is WEAKER Or currency A is flat and currency B is stronger Or currency A is little weak and B is stronger And those are weak trades and vulnerable to pullbacks. A double GAP means 2 separated triggers so we look at quote and base currency separated: Currency A is weak and currency B is strong Or currency A is strong and currency B is weak This applies to every time frame (analyses in multi-timeframe we will see later!).
A specialized indicator is used Advanced Currency Strength28 Indicator.
New Version ACS28: https://www.mql5.com/en/blogs/post/697384
It works on all time frames.
Again back to the GAP.
To define a currency (CS) is weak or strong I look at the slope (angle) of at least the last 2 bars or periods (because the currency line is not a candle should be called over 2 periods).
Those GAPs are to flat:
Those are nice CS angles:
I also differentiate between outside and inside GAP (oGAP, iGAP). As borderline we use the zero-line.
oGAPs (outside GAPs)
You see here strong JPY oGAP up and EUR oGAP down. So EURJPY was in a nice down move.
iGAPs (inside GAPs) Here are inside GAPs. For iGAPs I like see the angle stronger and coming from extreme outer zones.
(pictures were taken with an older indicator version)
To be strong up-slope from negative zones must be steeper than up-slope within positive zones. Because if the currency is still in the negative zone it has still weak sentiment until it crosses the zero market line. To look only at numbers or arrows (like many indicators) give only a small picture or fraction of the information. Be aware an iGAP is still only a pullback until it crosses the zero line. If you trade iGAPs you must have experience with pullback trading. Easier for beginners are the oGAPs trades.
Scan all 28 Forex pairs with only ONE chart... Currency Strength28 Indicators
Some more theory to understand the Forex market of the 8 main currencies, I call it The markets equilibrium:
All 8 currencies are at all times in equilibrium, which means the total volume of selling is always equal to the total volume of buying. We can see this now how the indicator shows. If we compare all positive values against all negative values they are equal. So the conclusion is if one currency is sold strongly there MUST be one or more currencies be bought. No money is lost, make sense?
Our job as a trader is to find out where the currency flow is going. It make no sense to sell a weak currency against another weak currency only because it is a little weaker, we have to find out which currency is strong and trade strong against weak!
In this picture we see the 8 currencies with the 8 colors. : Positive values A: EUR+CHF+CAD+AUD Negative values B: GBP+USD+NZD+JPY A is equal to B just negative. It does not mean we have always 4 values positive, there can be 3 positive and 5 negative or even 2 to 6, it will be always A=1/B. So what we learn from it as a trader? If one currency is very strong (major news) then there MUST be one or more weak currency, so there we go for a trade! Trade with the market, don't go against !!!
This is a perfect setup. Can you SEE?? Do you see the whole market in a blink of an eye?
You see it, right?
If something is strongly bought then there MUST be something else strongly sold. So get the right picture of the market but quick and buy the one going strong up against the one going strong down!
Now we go a little deeper in special features of the indicator CStrength28 which in this thread is used.
First we have Currency-lines with a special calculation which is different from earlier indicators of this kind. The goal is to get a soft Currency-line without many picks to get it soft and in same time to be reactive enough to show signals early. Those are adapted differently to each time frame, because each time frame behave different.
Second we have Market Fibonacci Retracement Zones (MFib): This levels are used with CS-lines for potential reversal zones and strength sentiment. Will be explained later more...
Third we have Market Momentum (MaMom). Will be explained later...
So now to the Market Fibonacci Zones (MFib) or we can call it Fibonacci on currency strength.
You see here this special levels MFibs at were very often a currency is flatting or reversing, this is known in pairs but it is also seen in a currency itself! MFibs levels working on the 8 currencies.
Market Fibonacci Retracement Zones are the 161 and 261 MFibs. If you have a dGAP signal do not enter if one of the 2 CS is already at this high levels. You should be already in a trade before the 100 MFib. Then when one of the 2 CS reach the 161 or 261 MFib you can be ready to think about taking profit. Watch if one CS loosing steam and get flat or get a hook, then close your trade.
Examples will follow...
The trade zones:
Inner zone green - trend-trades
From +100 to -100 market Fibonacci zones.
I call it also the trend zone. Here we look for trend-trades, both directions allowed preferred outside directions form Null or 23 MFib oGAPs (it is up to the trader he might decide to wait for a breakout of the 50 MFib.) and we can hold it until we see a hook, hold it still through the empty space between green and pink zone. If we do not have a trade jet we do not enter in the empty space it is to late.
Outer zone pink - reversal-trades
Higher then +161 and lower then -161 market Fibonacci reversal zones.
I call it also the reversal zone. Here we do never enter in direction to more outside (no oGAP), only as a reversal to the inside iGAP if we see a hook and an other iGAP (needs the second currency to build a pair, dGAP with iDir). If a currency have hit the reversal zone we are allowed to enter in the empty zone a reversal trade to the inside. Again: iGAPs need to be steeper then oGAPs. If a iGAP is not steeper it might be only consolidation or a small pullback until the trend resume.
I repeat: Be aware a iGAP is still only a pullback until it cross the zero-line. If you trade iGAPs you must have experience with pullback trading. Easier for beginners are the oGAPs trades.
Be aware smaller TFs are more volatile then bigger ones. Smaller TFs like to hit higher market Fibonacci reversal zones.
Trade example CADJPY
First trade was a BUY dGAP oDir, it was closed when CS weakened and got a hook. Then CADJPY reversed as expected. (The first trade could have had an earlier entry but I was not on computer.)
When it crossed the 0-line I get short so SELL its a dGAP oDir too but with inverted CS-line. Those short was closed as well when CS weakened and got a hook.
At the end you see again a long this time the BUY is a dGAP with iDir, the angle was steep, I did not wait for cross the 0
this is m30
Trade example AUDJPY
First trade was a SELL dGAP oDir, it was closed when JPY weakened and got a hook at 100 MFib.
Then AUD reversed at MFib 161 with strong slope and JPY as well, it was time of London Open. I entered long it is a dGAP with iDir, the angle was steep both currencies came from higher levels, I did not wait for cross the 0. The BUY was closed when JPY showed flat at MFib 50 and AUD got a hook right before MFib 161.
this is m15
Trade example CADJPY
Both CS have reversed around MFib 100 at time of London Open. Entry was when CS crossed the 0-line and also the MFib 50. Profit was taken at 85 pip. Enough... CS were above MFib 100 and 161 at this time.
This is m30
Trade example USDCAD Same day as trade above. Counter part here USD. USD not the strongest slope but steady, it was just crossing the MFib 23 to show bearish sentiment, CAD was just at 100 MFib at entry. Profit was taken at 95 pip.
This is m30 too
Trade example NZDJPY
NZD has hit MFib 261 and turned on it. JPY was near MFib 161 and turned some later. So this is dGAP with iDir a pullback trade. Entry was before both crossed the MFib 100. GBPNZD was possible too but spread on this one is very big and not advised for a m5 setup.
This is m5
Reminder: iDir: inside Directions are pullback trades, so target have to be smaller, get SL not to big or just above the last high, optional trail SL when a lower high showed up (in case of a short like here).
Trade example AUDCHF
Both CS showed a hook over MFib 161. First trade was a m5 setup and hit TP near a recent level. Then when switching to m15 there was still more room and good slope for a second trade. dGAP reversal trades with iDir. 2x 35 pip.
This is m5 and m15
Trade example CADJPY Again CS hit MFib 161 and reversed, JPY has hold a little longer flat before and then dropped together with CAD in a steep slope. dGAP reversal trades with iDir. TP 35 pip at a recent level.
This is m5
Same goes for the next 4 Trade examples.
I don't need explain much more...
TP 35 pip each
If you are a patient intraday trader then you may like more m15 setups. CHF turned around MFib 161 and after a strong NZD impuls from MFib 161 the slope of both CS have been constant over the half London session. This one I hold on until the CS showed weakness and got flat. This trade was 80 pip.
This is m15
Trade example CHFJPY It was taken at London Open. Market showed direction already in Frankfurt. Entry was when both CS broke MFib 50 and were hold until JPY went flat and CHF got a hook. dGAP oDir. This trade was 50 pip.
This is m15
Advanced Currency Strength28 Indicator Scan all 28 Forex pairs with only ONE chart...
First of all I trade all TFs and a word to money management. You have to apply the position size to it. Bigger TF, bigger SL, bigger TP, smaller lot size, longer run time! But with higher TF spread becomes less important and so we can trade more pairs. Conservative is a risk of 1% to 0.5% of account per trade. So do some math, first check how much have to be the SL then calculate the lot size with the risk to it.
But before you calculate your position size, you must know these 3 things:
Value per pip
The dollar value you’re risking on each trade
The distance of your stop loss
Here’s the formula:
Position size = Amount you’re risking / (stop loss * value per pip)
Now we will study how to trade CS with multiple time frames.
Try to stay in the trend of the higher TF and get your entry on the lower TF. The higher TF should be at least 4 times bigger. So m15 and m30 would be to near. A rule of say it must be 2 TFs higher would not work in every cases. D1 is 6 times bigger then H4 so this is same relation like m5 and m30 which is also 6 times more but if we say its 2 TFs higher, so this is relative. There should be a H12 but mt4 don't have. That's why H4 and D1 will work like a 2x TF higher. For beginners I advice to stay with/above m15. Higher TFs give better signals, but reduce the position size as it need bigger SL but it give you also bigger TP. m5 or m1 I use only if there is a reason for it, like on Open or if I decide to trade a red News. Still scalpers can explore it. So said this our TF choice will be: m5 - h1 (optional also possible m15 - h4) m30 - h4 or h1 - h4 (good for beginner) h4 - Daily (optional also possible h1 - Daily) Daily - Weekly To add a third TF is optional, more like to switch to a smaller TF to see more details for entry or exit if needed.
Trade example CADJPY with multiple time frames
H4 CAD was continuously dropping, JPY was strong up both oGAP
m15: JPY oGAP in agreement of h4 broke above MFib 50, CAD oGAP in agreement of h4 broke below MFib 23
(note: because the GAP counts with candle close the entry trigger GAP ends the candle before. Here also was used a micro pullback to enter the trade.)
The trade was closed at 50 pip
This is m15 and h4
Trade example CADCHF with multiple time frames H4: both CS continuously move in oDir m30 both CS oGAP in agreement of h4 The trade was closed at 30 pip when CAD and CHF lost steam and got flat.
This is m30 and h4
Edit example with the new indicator versions:
Using high risk/reward (RR) is profitable in the long run. Here SL is 20 pip and TP is 100 pip. Conditions must meet. Higher TF with the diverging direction of base and quote currency is a must. Higher TF CS: H4 EUR was falling and NZD rising = Sell EURNZD. The trend will be valid until higher TF itself will reach outer MFib levels or price reach H4/D1 demand zone. Then the entry is with Impulse signal and agreement of ACS28 (within MFib range, MFib no extremes, no high C-Volume). (Buy signal on the M5 chart were ignored because it is against the trend H4.)