Forex Trading Institute in Coimbatore | Forex Trading Training

What is a Currency Strength Chart?

A Currency Strength Chart is a powerful tool for forex traders, providing a visual representation of the strength of individual currencies. You can explore two key conditions using this chart:
1.Volatility of a Pair
2. Direction of a Pair

A Currency Strength Chart is a visual representation that compares the relative strength or weakness of different currencies against each other in the foreign exchange (Forex) market. It provides traders with a quick and clear overview of how individual currencies are performing relative to others over a specified period.

https://currency-strength.com/

Volatility of a Pair

This is indicated by the distance between the currency lines. Greater distance suggests higher volatility.

Direction of a Pair

Lines Separate: Indicates a specific direction.

Lines Get Closer: Signals an opposite direction.

Lines in Parallel: Suggests no clear direction.

Remember: While the Currency Strength Chart is invaluable, it should not be used in isolation. Integrate it with your own trading strategy for the best results.

Proper Position Sizing for Trades

To ensure you don’t exhaust your trading capital, follow these guidelines for position sizing:

Risk Management

Limit the loss of any single trade to a maximum of 2% of your account balance.
If you’re a beginner, restrict losses to 1% of your available balance.

Calculating Losses

Loss is not solely determined by the number of pips lost. It should be calculated based on your account size and average loss in pips.

Average Loss Formula: Average Loss=Total Loss (in pips) / Number of Lost Trades

Position Sizing Based on Account Size

For instance, if your average loss is 10 pips, refer to the table below to guide your position sizing.
Here's a guide to help you determine the appropriate position size for your trades based on your account balance and risk tolerance.

Account Size	Loss Cut (%)	Loss Cut (Amount)	Position Size
$1,000	1%	$10	0.1 lot
$1,000	2%	$20	0.2 lot
$5,000	1%	$50	0.5 lot
$5,000	2%	$100	1.0 lot
$10,000	1%	$100	1.0 lot
$10,000	2%	$200	2.0 lot

Winning Rate

Formula: Winning rate = Number of winning trades ÷ Total number of trades

Explanation:This metric shows the percentage of your trades that are profitable. A higher winning rate indicates a greater proportion of successful trades.

Profit Factor (PF)

Formula: PF = Total profit (in pips) ÷ Total loss (in pips)

Explanation:The Profit Factor measures the ratio of total profits to total losses. If the PF is 1, it means you're breaking even. A PF greater than 1 indicates profitability, while a PF less than 1 indicates losses.

R Multiple

Formula: R multiple = Average profit (in pips) ÷ Average loss (in pips)

Explanation:The R multiple compares the average profit per trade to the average loss per trade. A higher R multiple means that your winning trades are significantly larger than your losing trades, contributing to overall profitability.

Position Sizing Based on Account Size

Entering the forex market without proper profit and account management is as perilous as climbing Mt. Everest without knowing how to tie your lifeline ropes. It's crucial for your trading success, much like your life depends on safety measures while climbing. Always review your recent trading results. Analyze data from at least your last 20 to 100 trades to determine your R multiple and winning percentage.

What is a Currency Strength Chart?

https://currency-strength.com/

Volatility of a Pair

Direction of a Pair

Proper Position Sizing for Trades

Risk Management

Calculating Losses

Position Sizing Based on Account Size

Winning Rate

Profit Factor (PF)

R Multiple

Position Sizing Based on Account Size

Position Sizing Based on Account Size

USEFUL LINKS

CHART ANALYSIS

NEWS WEBSITES

CURRENCY STRENGTH METER

LOT SIZE CALCULATOR

Follow Us

Quick Links

Legal