Help improve your trading with the forex power indicator. Traders can access this FREE tool by visiting this part of the Trading Strategy Guides website.
The tool is an AMAZING help for all Forex traders! And it will tremendously BOOST your performance so it is very important that you read and understand every part of this blog post. Please place a chat below this post if you have any questions or comments. We also have training for the ADX Indicator.
The Forex Power Indicator is extremely VALUABLE because it:
- Identifies the strongest and weakest currencies in the market;
- Offers a method on how to match the strong and the weak together;
- Makes it easier to scan the market;
- Increases the profitability of your trading.
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?
The indicator shows the STRONG currencies and the WEAK currencies. But 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 that principle, it is best to take a look at the screenshot above. The graph simply shows which currency is the strongest (AUD), 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. Also 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:
- Your target gets hit sooner;
- Your trade is out of risk quicker;
- You might even encounter windfall profits (when using a trail stop loss).
One of the advantages of trading the Forex market is, in fact, this 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 as much as possible the worst moving ones (slow consolidation).
Another benefit is that the strength versus weakness analysis can be completed on 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 for any type of trader, from a scalper to a long-term position trader. Secondly, it can be even used for multiple time frame (MTF) analysis and for MTF trading purposes.
The 3rd advantage is that the Forex Power Indicator is a great way to scan the market in a quick way 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 counter currency. For instance, if a trader spots USD strength during an average trading day, they could see major differences in results if they pair it with a weak currency (lots of profits) or with another strong one (pair does not move much). Here above you see EURUSD as the best pair on the weekly chart. Also read about the Trail Stop Loss in Forex.
STEP BY STEP GUIDE ON HOW TO USE THE FOREX POWER 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 on February 12th we warned for the current trends to continue which indeed happened (read here), Euro weakness to continue last week (also true), the AUDUSD to continue as well (only partially) and not to be too interested in the GBPJPY long (true).
The first step, when using the Forex Power Indicator, is to go to the Winners Edge Trading website and find Forex Power Indicator (here).
- Click on the time frame of choice;
- Check which currency is strong and which ones are close to it;
- Check which currency is weak and which ones are close to it;
- Check the top 5 currency pairs and analyze the top 5;
- Analyze the charts of the preselected pairs and check if there is indeed a setup. If multiple pairs have good potential, then the trader needs to either to choose the best one or split the risk among the multiple setups according to their risk management parameters.
Be aware that not all charts will be setup for a 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 for understanding the chart structure or any of our own custom made strategies.
The indicator does give us a quick understanding for which currency pairs have the most potential. And we can then focus on those pairs instead of ‘wasting’ our time on pairs that are less attractive.
What do you think of the Forex Power Indicator? Did you ever use it before? Can you show us the advantages of using the forex power indicator?
Thank you for reading and sharing this blog post because we think the Forex Power Indicator has an enormous value for all Forex traders. We appreciate your efforts in helping other traders as well.
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Have a great weekend and wish you Happy Hunting!