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Amandeep Sonewane

7 August 2017

Forex Technical analysis

How to Trade Forex using MT4 currency strength indicator

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The Forex MT4 currency strength indicator gives you the quick guide to determine the weak and strong currency. Isn't it profitable if you know the strength of currency?

7 August, AtoZForex – When you hold an FX position, you always need to know the currency pair you are trading. This indicator makes many fascinating open doors for the traders and enhances the capacity to expose your perspective of two economies all the while. It can also be difficult to judge the performance of the currency pair without using such indicators. But by using the MT4 currency strength indicator you can drastically increase your profits in Forex trading.

MT4 currency strength indicator

The MT4 Currency strength indicator is a tool that measures the strength of individual currencies in a pair. This indicator goes further in employing Moving Averages and ADX indicators to confirm the strength of a pair, identify the trend and identify the stage of the trend.

The mt4 indicator takes the readings from every forex pair over the last 24 hours and applies logical calculations to each. It then bundles together each the associated currency pairs to an individual currency and thus finds out the current strength of the currency. You can download the mt4 currency strength indicator from here.

The Advantages of Using the mt4 currency strength indicator

The Elimination of double exposure:

Opening multiple positions with pairs that are highly correlated are not advisable as it gives rise to more exposure. Moreover, having higher exposure to a particular currency can be harmful should the analysis go wrong. For example, by going long on AUDCHF, AUDJPY, and EURJPY, a trader gives rise to double exposure if highly correlated.

The Elimination of unnecessary hedging:

If you already know the correlation strength between different pairs, then you can avoid unnecessary hedging. For example, there is a negative correlation between EURUSD and USDCHF that restricts taking positions in the same direction. The reason is when you win on one trade, you are more likely to lose on another trade.

Signals high-risk trades:

Correlation between different currency pairs can also signal the amount of trade strategy risk. It might also happen that one of the pairs is indicating a strong movement, while the other is just ranging, which means to avoid entering the trades.

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