Forex Trading with TA’s Indicators
Ahmed Tahir
University of Management and Technology, Lahore, 54000, Pakistan
Roll No. S2022393001
ABSTRACT
INDEX TERMS
I.  INTRODUCTION
II. Related Work
III. Proposed Strategy
In this paper a new strategy proposed with better accuracy
and Results. This strategy generated good results in forex
trading. This strategy contains 6 technical analysis
indicators like currency strength matrix, bank entry, support
and resistance levels, cot report, swaps and seasonal cycles.
After draw a matrix a specific pair figured out then goes
through this pair from the indicators. Every indicator is
briefly discussed below.
A. Currency Strength Matrix
The Currency Strength Matrix used for market analysis to
trade in forex market. It measures the strength of 8 major
currencies based on the trends in their respective pairs,
making it simpler for traders to choose the best currency
pairs to trade and then apply trading strategy on the specific
pair. The forex market is not easy to trade due to its
complexity. As a result, even seasoned traders frequently
find themselves in trades that they later come to regret.
With knowledge of matrix, traders may eliminate "poor
pairs" and concentrate on better probability trading pairs.
In CSM the main point is how to score a matrix and how to
draw it. For make a matrix, analysis of all 28 pairs and
according to trend score +1 to uptrend and -1 to downtrend
for every single currency. The secondary currency depends
on base currency e-g for EURUSD if EUR score +1 then
USD score will be -1 or vice versa
The matrix table is shown below.
We consider 3 pairs by examined the matrix CADJPY (+7,-
7), GBPUSD (+5,-5), GBPJPY (-5, +7)
B. Bank Entry
In forex trading there are 3 type of traders Institutions,
Banks and Retailers. Institutions are major players in the
market like financial institutions, money managers and
hedge funds. A legal entity engages in institutional trading
where it manage money of different investors by investing
in a variety of financial instruments, such as stocks, bonds,
real estate, etc. In a nutshell, large corporations carry out
institutional trading on behalf of clients. Many other
instruments, including futures, swaps, and others, may not
be accessible to private traders because they need
substantial money and are often profitable long-term
investments. Institutional investors also receive the best
trade prices. Institutional investors are the trading firms
which have ability to trade exotic financial instrument and
also the ability to manage a significant amount of funds for
the client.
Banks also plays a major role in trading when banks make
entry in the market they start to retest the market because
they don’t want to trade anyone with them. In this strategy
we detect the banks move and do trading with banks.
Retailers are small traders who have small accounts with
500 to 5k$. When bank makes entry they start issuing
retailers. Market started to trap where some of the accounts
being washed and some lose their major equities. We detect
the bank move with the candle stick pattern. The pattern is
shown below
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Fig 1
Fig 2
Buy Rules:
 Break the low of last candle.
 Close above the high of last
candle.
 Volume of this candle should be
high from the previous candle.
Sell Rules:
 Break the high of last candle.
 Close below the low of last
candle.
 Volume of this candle should be
high from the previous candle.
C. Support and Resistance Levels
The market’s movement is limited by the two price charts
namely, 'Support' and ‘resistance'. The point where the
market price usually stops rising and sinks downward is
called resistance level. On the other hand the point where
the market stops going downward and push backs is called
support level. The levels of the market depend on the
supply and demand rule. The price will go up if the buyers
in great numbers and vice versa. The levels are shown in fig
below.
Fig 1
In terms of forecasting future price changes, a level is more
likely to be accurate the more frequently a price touches it.
Since traders tend to buy or sell after a level is achieved,
both levels frequently become into psychological hurdles
for them. The outcome is only strengthened by this. The
price traps the market in such a way that it crosses the
resistance level but returns exotically. If the price crosses
any level for a longer period of time then most probably it
will continue to follow the same trend.
D. COT Report
The Commitment of Traders (COT) report publishes at
every week. The holdings of different participants in US
future market shown in this report. The Commodity Futures
Trading Commission (CFTC) publishes report at every
Friday. The report gets public at 3:30 Eastern time. It gives
a summary of the commitment made by the classified
trading group as of Tuesday that same week. The
Commitment of Traders report aims to increase the
transparency of these intricate exchanges and give investors
the most recent information on upcoming market
operations. Many futures traders use it as a trading signal in
the market.
The COT report divides the market players in two groups
Commercials and Non-Commercials. The reason the COT
report is important is because it’s the best way to visually
understand where BIG players are positioned in the market
and how BIG money has flowed. The COT report tells you
the net positions either buy or sell.
E. Swaps
In forex, a swap is the interests you either pay for or get on
a deal that you hold overnight. Swaps are of two types swap
long and swap short. Swap long used long positions and on
the other hand swap short used for short positions.
Depending on the financial instrument you're trading, they
are stated in pips per lot and might change.
F. Seasonal Cycles
There are two positions that traders might take in the
currency market: pro- or anti-dollar. The U.S. dollar has
long been the main cause of changes in exchange rates
since it makes up more than 85% of all currency
transactions. Most traders either use fundamental, technical,
or a mix of the two to forecast the future movement of the
dollar. But the time of year may also affect how the
American dollar reacts to other currencies. Using
indicators, technical analysis examines historical price
behavior.
IV. DISCUSSIONS
VI. CONCLUSION
REFERENCES
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