How to Trade with The Currency Strength Meter

The Currency Strength Meter

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The currency Strength meter comes in different presentations. It graphically displays how strong or how weak the individual currencies are at any given time in the market. This serves as a guide for placing trades correctly.

The currency strength meter has an algorithm that enables it to measure the strength of the individual currencies  around the clock and refreshes same at any instant.  This serves as a visual guide that enables a trader to decide whether to buy or sell the currency pair. 

If for instance , you observe that for the pair of  GBPJPY, that the currency strength meter displays GBP as going strong (green) as displayed in the color bar while JPY is getting weaker (red) then it will be best to get ready to buy the currency pair. To confirm this, you may view your trading chart to observe the beginning of the bullish run for the currency pair. This step is best taken each time before placing a trade. 

You may use the Relative Strength Index (RSI) to confirm that it is the correct entry for the bullish run or a price correction or a reversal trend. If for the pair EURUSD it is observed that USD is stronger (green) while EUR is weak (red), then it will be correct to get into a selling entry for the pair 

If the two currencies in a pair are close to each other in strength or weakness or of average strength as may be indicated by the Currency Strength Meter, then expect a range of sideways movement. In such a situation, you had better stay off trading until a trend is once again established.

If you leave the currency strength meter for a while, you may have to refresh it to get the current position of the currency pairs at the new instant. 

Click here to check out one type of the currency strength meter.