Forex Power Indicator: FREE Trading Strategy Booster To Level-Up Your Trading

The Forex Power Indicator is our proprietary (and did we mention FREE) tool that calculates currency strength, and plots the major currency pair strength onto an easy-to-read chart.

This guide will tell you everything you want and need to know about the Forex Power Indicator, but if you’ve read this before and want to be taken straight to the tool, Click Here.

Introduction: Forex Power Indicator Explained

The Forex Power Indicator is automatically calculated and updated by the software. This means that you, as a trader, are not required to update anything. Simple, isn’t it?

Moreover, the indicator shows the STRONG currencies and the WEAK currencies. It also shows the currencies that are in between the strongest and weakest. Traders can use the indicator to rank the major currencies from strong to weak.

To understand this principle, it is best to take a look at the screenshot above. The graph simply shows which currency is the strongest (AUD), which is the weakest (GBP), and which majors are in between. 

Understanding the chart is easy: any figure above 0 means relative strength, and any figure below 0 means relative weakness. For more information on this read how currency pairs work in Forex.

Why Is Strength and Weakness Important?

Forex traders are able to achieve an enormous advantage by recognizing strong and weak currencies because it allows you to identify the currency pair with the greatest leverage: the strongest and weakest paired together.

Fast-moving pairs are much more attractive than slower ones because:

1. Your target gets hit sooner.
2. Your trade is out of risk quicker.
3. You might even encounter windfall profits (when using a trail stop loss).

One of the advantages of trading the Forex market is the ability to trade the pair(s) with the most movement. Ultimately, the goal for Forex traders is to trade the best-moving pairs and avoid the worst-moving ones as much as possible (slow consolidation).

Another benefit is that the strength versus weakness analysis can be completed in almost all time frames. Traders can use our Forex Power Indicator on any time frame ranging from a 5-minute to a monthly chart. 

This means that, first of all, the tool is accessible to any type of trader, from a scalper to a long-term position trader. Secondly, it can even be used for multiple time frame (MTF) analysis and for MTF trading purposes.

The third advantage is that the Forex Power Indicator is a great way to scan the market quickly and immediately spot which currency pairs have the most potential.

Reviewing and analyzing one currency pair takes time and effort. With the Forex Power Indicator, a trader’s vision is immediately pointed in the right direction.

This advantage cannot be stressed enough. Most traders end up trading part of the right pair but not against the best countercurrency. I love the forex Power indicator it is such a cool way to trade but there is another way, EA trailing Stops.

For instance, if a trader spots USD strength during an average trading day, they could see significant differences in results if they pair it with a weak currency (lots of profits) or with another strong one (the pair does not move much).

Here, above, you see EUR/USD as the best pair on the weekly chart. Also, feel free to read about the stop loss order Forex.

Step-by-step Guide on How to Use the Most Powerful Forex Indicator

The Forex Power Indicator has been incorporated in recent blog posts to show how traders can use the tool in real-life trading.

In one of the articles, we warned for the current trends to continue, which indeed happened, the Euro weakness to continue, the AUD/USD to continue as well (only partially), and not to be too interested in the GBP/JPY long.

1. Click on the time frame of choice.
2. Check which currency is strong and which ones are close to it.
3. Check which currency is weak and which ones are close to it.
4. Check the top five currency pairs and analyze them.
5. Analyze the charts of the preselected pairs and check if there is a setup. If multiple pairs have good potential, then the trader needs to either choose the best one or split the risk among the multiple setups according to their risk management parameters.

Not all charts will be set up for trade just because the Forex Power Indicator says so. We still need to do our homework and check it. We can use ‘classical’ technical analysis to understand the chart structure or any of our own custom-made strategies.

The indicator does give us a quick understanding of which currency pairs have the most potential. We can then focus on those pairs instead of ‘wasting’ our time on less attractive pairs.

Tips on how to use the Forex Power Indicator

The Forex Power Indicator is designed to help forex traders save time and boost profits by instantly identifying current trends and potential trade opportunities.

It identifies the relative strength of the major currencies based on monthly, weekly, daily, 4-hour, 1-hour, and 15-minute time frames. This relative currency strength is determined based on a highly-developed formula that weights the historical relationships that exist between the various currencies. These relative currency strengths are then used to identify the Top 5 currency pairs that are showing the highest potential for trade.

Just click the required timeframe at the top of the Indicator – either Monthly, Weekly, Daily, 4-hour, 1-hour, or 15 minute – and you’ll instantly receive two updated graphs that form the basis of this tool.

The graph on the left shows the current strength or weakness of each of the 8 main currencies – based on the detailed assessment formula we have developed. The graph on the right shows you the top 5 pairs, from all the combinations of pairs that involve the major currencies, that have been identified as having the most potential for trade. We also have training for the ADX Indicator.

The identified pair, and whether it’s a potential buy or sell, is indicated along the bottom of the graph. The actual graphs show the direction and relative strength of each currency in the recommended pair.

The numbers on the Y-axis of each chart represent average pips movement. For instance, if you’re looking at the 15-minute chart and the ‘USD’ bar is at level ‘5’ on the ‘Forex Power’ chart, it means it has moved a weighted average of 5 pips against the other 7 major currencies.

Similarly, if the ‘EUR’ bar is at level -4.5, then it means the Euro has moved down a weighted average of 4.5 pips against the other 7 major currencies. If the USD has moved up, and the EUR has moved down, then entering a Sell position on the EUR/USD will most likely be recommended in the ‘Top 5 pairs’ graph on the right.

This tool is not intended to be a complete solution for identifying trades. However, it is valuable as a way of identifying currency movements and determining potential trades for further analysis. We also have training for Average True Range Indicator.

If you want to see ALL of our tips, tricks, and training on exactly how we trade with the Forex Power Indicator tool please go here and get our exact strategy. It comes in a PDF so you will be able to save it and read it any time! Or just click the image below.

Used the right way, it will save you a lot of time and should work as a great addition to your current trade assessment processes.