Today we will talk about the well-known Currency Strength Meter indicator. You know, everyday I receive a lot of questions about how I choose the pairs to trade on. Let me share with you a tool which I think of as a “filter” in my decisions. It is called Currency Strength Meter, and it will help you make better trading decisions or verify signals provided by other indicators.
The Currency Strength Meter is an indicator that measures the individual strengths of currencies. With this knowledge, a trader can leverage the weakness and strengths of currencies to choose pairs that have the potential to be lucrative.
Many factors affect the strength of currencies. Some include interest rates, economies, and news. With the currency strength meter indicator, however, a trader can see the strengths of these indicators without having to do any extra computing.
How to use Currency Strength Meter
There are many ways to use the currency strength meter in your trading, and they all depend on your trading style. If you are trading in the trend direction (which I personally highly recommend), take advantage of the pair with the strongest trend direction.
For instance, according to the Currency Strength Meter indicator, the AUD/JPY pair has the biggest potential for buy orders. Open the AUD/JPY currency pair chart to look for BUY trade entries using other forex analysis tools, such as other indicators.
For example, Forex Xcelerator indicator can be a great helper. It will not only pinpoint the perfect entry point for you, but it will also generate TakeProfit and StopLoss levels depending on the market volatility!
As you can see from the screenshot, the last signal of Forex Xcelerator on AUD/JPY, H4 was a SELL signal. On this particular chart, we should soon get a BUY signal and enter it with the offered settings. Because this signal has already been confirmed by a Currency Strength Meter indicator.
My conclusion on the Currency Strength Meter
The currency strength indicator is a great tool but it should not be considered as an entry or exit indicator. Imagine you see that a particular currency pair has a big potential for buy orders. Don’t open the chart and enter the trade without proper analysis. The best way is to pick up a pair with a strong upward or downward trend. Then you can rely on your favorite BUY/SELL indicator.