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Trading successfully requires a simple yet effective system to enter and exit trades. I'd like to show you our proprietary forex ranking method called FXrpm. This is a simple-to-use indicator that looks at the seven most popular cross-currencies and identifies the strongest and weakest pairs.
FXrpm is based upon a proprietary algorithm created by Cesar Alvarez, Director of Research for Connors Research. This specialized method is able to identify which currency pairs are seeing large inflows of money and which pairs are seeing large outflows. A rating is then given to each pair between 1-7, with 1 being the strongest and 7 being the weakest.
First we need to check the FXrpm page. As you can see, the strongest two pairs are in green and the weakest two pairs are in red. The three pairs in the middle are neutral. You should be looking for long entries (buy setups) in the two strongest pairs (green). Conversely you should be looking for short entries (sell setups) in the two weakest pairs (red).
For those of you who day trade the forex markets, we offer real-time FXrpm
. FXrpm subscribers receive real-time updates, including a breakdown of the previous 48-hours in 5-minute increments so they can track exactly when the ratings changed due to increased/decreased money flow. Here is a screen shot of the real-time version.
Let's take a look at some actual trading examples:
On 1/17/06 USD/JPY had an FXrpm reading
of 1 at 3:15 AM (small green arrow). As you can see, this led to a very large rally.
On 1/20/06 USD/CAD had an FXrpm reading
of 7 at 5:45 AM (small red arrow). In this example, USD/CAD declined sharply for the next 2-hours.
Obviously every trade won't work out this well. However, as these two examples show, FXrpm
can help improve your trading. They should not be used exclusively as buy/sell signals, but in conjunction with chart patterns, economic/fundamental news, etc.Click here for more information on FXrpm. To help you get started we have strategies you could employ in addition to running free training classes every day that are designed to help you understand FXrpm and how to use them more effectively.
Darren Wong
Associate Editor
darrenw@tradingmarkets.com
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