Currency Trend Index
Why do so many forex traders struggle—experiencing repeated setbacks or even failing completely—in this industry? One reason is that they fail to view forex market movements holistically. To clarify: there are eight commonly traded currencies, which combine to form 28 currency pairs—is that clear so far? It is crucial to understand that the movement of any currency—whether strengthening or weakening—can influence, or be influenced by, the movements of other currencies; in other words, there is an interrelationship between them. From the statement above, we must highlight the concepts of "influencing" or "being influenced." "Influencing" implies that a specific currency acts as a trendsetter capable of driving the movements of other currencies; identifying these specific currency symbols is essential to avoid getting trapped in a trade moving in the wrong direction—which could ultimately lead to a Margin Call (MC). So, what constitutes the "correct" movement? It is the movement of a currency that is actively trending—specifically, the strongest or weakest currency. We focus on the dominant ones because it is rare for two currencies to exhibit strong or weak trends simultaneously. Therefore, we must gauge the relative strength of currencies to select the right pair for trading: pairing the strongest currency with the weakest one, or vice versa. We refer to this selection strategy as #PairTrending.
If you intend to BUY a currency, ensure it shows no signs of weakening; conversely, if you intend to SELL, ensure the currency shows no signs of strengthening. This assessment can only be made by consulting a matrix table, such as the one shown in the image below.
PairTrending identifies just one specific pair out of the 28 available, and this choice is not fixed; it applies only during certain periods and may shift to a different pair over time. Consequently, traders who focus exclusively on just one or two specific pairs are unlikely to survive in the market for long.
The right currency pair is, of course, the one that's trending at the time, and that's what we choose, what we call a trending pair. A trending pair is a combination of two currencies, the strongest and the weakest. Therefore, the trending movement doesn't experience too many corrections. Movements with many corrections leave traders uncertain as to whether the movement is merely a correction or a reversal.
It's important to note that in forex trading, there are 8 commonly traded currencies. Converting these 8 currencies into currency pairs results in a total of 28 currency pairs. Of these, only 1 currency pair is trending, so the ratio is 1:27. Converted as a percentage, 4% are trending pairs and 96 are non-trending pairs. Imagine that only 4% of currency pairs are trending, and forex traders generally choose the wrong trending pair. Consequently, the movement is unclear, aka sideways (rally).
On Currency Trend Index Table Dashboard, you can choice best pair trending pair, its 1st is stongest trend level & 8th is weakest trend level.
For example (look picture as attch)
1st level GBP stongest 26 pips average
2nd level JPY strongest 20 pips average
3th level USD
4th level CHF
5th level EUR
6th level CAD
7th level AUD weakest 7 pips average
8th level NZD weakest 3 pips average
PAIR TREND IS GBPNZD (1th level currency vs 8th level currency)
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