Currency Strength Matrix Indicator for MT4 is one of the Currency Strength Indicators that I developed to help you spotting possible trading setups. In this page I will introduce you to its functionalities.
What is a Currency Strength Indicator?
A currency strength indicator is a graphical tool that shows the strength of a currency.
Common indicators usually show the strength of a currency in relation to another currency, however, with some calculations it is possible to find the absolute strength of each individual currency.
Therefore, A Currency Strength Indicator (or Meter) is a tool that tries to express the absolute strength of a currency, so that you can compare this strength with the strength of other currencies.
There are many ways to calculate the absolute strength of a currency but usually they all try to extract it considering all the values of another indicator across multiple pairs.
In other words, to calculate the strength of JPY for example, an algorithm will analyse the values of the same indicator in all the pairs involving the JPY.
This is not something easy to digest for traders new to the concept of Currency Strength, but don’t worry, it’s normal.
Introduction to the Currency Strength Matrix for MT4
The Currency Strength Matrix is a Currency Strength Meter developed to measure the strength of the eight main currencies.
The Strength of a currency can be a good indicator for a possible move of the market.
A matrix of values show the strength of the currencies.
In this matrix each rows is a currency and each column is a time frame.
A cell contains the difference between the value of the “Cumulative” Moving Average in the current candle and the previous
For “Cumulative” MA we consider all the pairs involving a specific currency, expressing then difference in percentage.
You can sort the currencies by strength in a specific time frame to see on top the strongest and on bottom the weakest.
How to Read the Currency Strength Matrix
Even if the look of the Matrix seems confusing it’s not hard to understand this Indicator.
The currencies are sorted by strength in a specific time frame so that you can find on top the strongest currency and on bottom the weakest.
You can choose to see the actual resulting value of the applied formula or just the colour and symbol.
A green cell, or with positive numerical value, means that in that time frame the currency has gained strength compered to the previous candle.
A red cell, or with negative value, means that on the opposite, it has lost strength.
You might be asking “Why so many time frames?”
Well, you can select to ignore and hide some of the time frames however I believe that seeing how a currency is going across all the time frames will provide a much better picture of its trend.
A currency with all its cells in green means that it is increasing its strength across the board
Otherwise, a currency with all red cells is losing strength.
How to Trade the Currency Strength Matrix
The basic rule with a Currency Strength Meter is to trade a strong currency against a weak.
Currency Strength Matrix for MT4 is an indicator designed to catch rapid movement in a currency’s strength. The Currency Strength Matrix is ideal for:
- Breakout strategies
- Trend continuation strategies
- Trade News
- Trade Market Open
- Closing gaps
- Sudden big moves
You will want to wait a good setup to trade, ideally you will want to buy a currency in the top two spots that has all its timeframes with positive values, selling a currency in the bottom two spots that have all timeframes with negative values.
Full Features of the Currency Strength Matrix for MT4
The Currency Strength Matrix for MT4 is a complex indicator that tries to give you an easy reading of the market, at the same time it is versatile enough to hopefully adapt to your trading style.
The main functionalities of the Currency Strength Matrix are:
- Showing the strength of individual currencies in several timeframes
- Sort the currencies by strength in a specific time frame
- Possibility to ignore and hide some currencies
- Possibility to ignore and hide some time frames
- Highlight when a currency can be bought or sold
- Show a possible pair to trade
- Sending a notification via Alert, Email and/or Mobile App
- Detection of missing historical data
MetaTrader 4 has known limitations with the back test of multi-currency indicators and robots so I created a FREE DEMO that you can try with limited functionalities, you can download it clicking the following link.
The Currency Strength Matrix is a very useful tool that you should integrate in your toolbox. Knowing the strength of a currency and overall market condition will help your trading, you will be notified about possible pairs to trade or find confirmation for your already existing strategy.