Question
Hello Anna, thank you very much for your books and market news in your site! I read all your 3 books. I have few questions and hope you do not mind to answer them: 1) How does the currency strength indicator (CSI) works? I don’t remember seeing that in your books, sorry if I missed. What is the formula behind it? 2) What are the advantages of the Ninja Trader compared to the MT4? Should I skip trying to trade with MT4 and go directly learn about the Ninja Trader? 3)Is the CSI available for Ninja Trader as well? How to get it?
Answer
Hi – many thanks for your email and please accept my apologies for the delay in replying. Thank you also for buying all three of my books and I hope you found them helpful and enjoyable. With regard to the questions, I will try to answer these as fully as I can. The currency strength indicator is mentioned in my books and works in all timeframes, so whether you are a scalping trader or swing or trend trader, it’s a valuable tool. It works by analyzing the price action across the 28 currency pairs, and then filters out and isolates the 8 major currencies, showing you simply clearly and quickly whether a currency is strong or weak, rising or falling, against the other major currencies. This is the cornerstone of the trading forex – understanding and identifying whether a currency is oversold or overbought. In other words when a currency is strong or when it is weak. These are the points at which a currency may reverse the current trend. There are of course a multitude of forces which drive currencies higher or lower, and since the financial crisis of 2007/2008, these have become ever more diverse. Prior to these events one could argue that foreign exchange was in fact a market of free floating exchange rates. Since then, this is far from the case, with central bank intervention, bond buying programs and interest rate manipulation now the norm. I could even go so far as to say that currency exchange rates are no long free floating. This will of course change, once the financial world returns to some sort of normality, but we are some way off this just yet, and with politicisation of the euro, coupled with negative interest rates, and bond buying on a grand scale, it will take years before free floating exchange rates return. All the more reason then that one of the key tools for currency traders is a currency strength indicator. The indicator works as an early warning giving you a heads up on possible changes in trend and constantly filtering these opportunities for you in all timeframes. When a currency is at the top of the indicator it is moving into overbought, and when at the bottom is oversold. If you have the books there are several examples there. Moving to your next question about a choice between MT4 and NinjaTrader, I use both, but for very different trading. As a rule of thumb the MT4 platform is more geared towards spot forex, and generally will be provided as a ‘free’ platform by your broker, so you have your charts and brokerage in one place. Having said that, forex brokers are increasingly offering a variety of other markets including indices and some commodities, as well as more exotic currency pairs. Order management and execution is very simple with this platform which is one of the reasons it is so popular. In addition the live data feed will be included with the platform. Until recently NinjaTrader did not offer a brokerage of any kind, but have since bought Mirus futures. Again in general terms, NinjaTrader is a more sophisticated platform and really aimed at those traders trading futures, commodities and stocks. It is immensely powerful and when combined with other brokerage accounts also offers the option of avoiding exchange fees under the CME waiver programme. Whilst the platform itself is free to download, you do need to pay for a data feed, and the one use is from Kinetick, their preferred partner. This combination will also give you the option to trade using tick charts, something which is not available on MT4. So it is very much a personal choice based on your proposed markets. If you are trading spot forex primarily then I would suggest that MT4 is fine, although you can of course trade this using NinjaTrader and an appropriate brokerage account. If you are trading more heavily in the futures market, then I would suggest NinjaTrader is a good option with the only cost being the feed itself ( and don’t forget the CME waiver programme). Finally, yes the currency strength indicator is going to be launched for NinjaTrader this week, and I will send you details as soon as its available. You can find further details here: http://www.quantumtrading.com. All best wishes and many thanks again – and apologies for the delay in replying – all best wishes Anna
Hi Anna.
Im moving back to UK. Can you recommend a broker for wide ranging trades (except hard core Forex).
Thank you for your invaluable assistance.
Michael
Hi Michael – many thanks and welcome home:-) As you can appreciate I do try to avoid giving broker recommendations for obvious reasons, but all I can tell you is those that I have experience of and use regularly myself and I must stress, these are not recommendations, just statement of fact. My primary brokerage account is with Interactive Brokers, simply because they offer virtually every market around the world, and every instrument. They do have a UK operation based in London. My other trading accounts are with Tradestation, the platform is free for forex provided you use their brokerage, and OANDA for spot fx. As always, when checking out brokers, please do your own due diligence and make sure you understand where they are regulated, who owns them, and safeguards and protection for you and your trading capital. Also, the type of broker, whether market maker, STP, ECN etc I hope this helps and if you do have any other questions please just drop me a line – all best wishes – Anna
Thanks much for your reply Anna; such a comfort to hear a sane and sanguine voice. I have begun to feel the same direction was the right one for me (IB) and I derive great comfort from your experience.
I will continue to track your advisory information with anticipation as well as gratitude for your sharing.
Thank you.
Hi Anna
I’m currently on my 3rd book of yours and i must say i find them very good reads and you make the processes easy to understand.
My question is about IG index and trading spot forex through them, due to the fact that there won’t be any capital gains on profits. Are their prices and spreads a viable option for scalping and are there any other factors i need to consider trading through a spread betting company?
Kind Regards
Paul
Hi Paul – many thanks for your very kind comments which are much appreciated and I’m delighted you are finding them easy to read and I hope enjoyable as well:-) With regard to your question, I am not a tax expert, but as I’m sure you know, spread betting is often seen as one which is ‘tax free’. Whilst in theory this may be true, the practical reality is that if you do become a full time trader using a spread betting account, then the tax authorities will almost certainly classify you as a full time trader and therefore taxed accordingly, and will generally only accept trading revenue as tax free if you have a primary income and trading is therefore seen as secondary. As always, I would urge you to get some professional advice on this first. In terms of prices and spreads my only suggestion as always is to choose your broker with care and ensure you do your own due diligence, and in particular the type of broker classification. There is no such thing as a free lunch and the cost of trading will be wrapped into the spread somewhere! Paying a small commission is no bad thing and will also tend to define the type of broker and whilst this may appear a slightly more expensive option, this is all relative and depends on your ultimate order size as your experience develops. Hope this helps and many thanks once again – kind regards Anna