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US Dollar index vs US dollar FX index


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US Dollar index vs US dollar FX index

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  #1 (permalink)
atlanta
 
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On sierra chart there is the USDX and the USD-X. one is the US Dollar Index and the other is the US Dollar FX index. what exactly is the difference between these? thanks

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  #3 (permalink)
zurich
 
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halperin View Post
On sierra chart there is the USDX and the USD-X. one is the US Dollar Index and the other is the US Dollar FX index. what exactly is the difference between these? thanks

see here:
Sierra Chart Market Statistics - Sierra Chart

USDX is the weighted calculation , like the underlying of the futures contract

USD-X is a simple average of the majors. (its quite a cool tool !)

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  #4 (permalink)
Frankfurt Germany
 
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puma View Post
...
USD-X is a simple average of the majors. (its quite a cool tool !)
...

That's not quite correct. It's not a simple average, it's the geometrical mean of the majors adjusted by a normalization factor.

Indeed all the SC forex indices are calculated as such which makes them the most interesting instruments when it comes to currency trading. You even may calculate your own indices.

If you analyze the behaviour you will be surprised how well and reliable those indices trend. It makes them the perfect instrument for swing trading. The somewhat difficult part is to calculate currency baskets mirroring these indices and the execution. An experienced programer shouldn't have big problems. Once that's done you have perfect synthetic but tradable instruments almost nobody in the market is aware of. Combined with the huge capacity this alone (the unawareness of most market participants) gives you a big exploitable edge.

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  #5 (permalink)
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MT4Survivor View Post
That's not quite correct. It's not a simple average, it's the geometrical mean of the majors adjusted by a normalization factor.

Indeed all the SC forex indices are calculated as such which makes them the most interesting instruments when it comes to currency trading. You even may calculate your own indices.

If you analyze the behaviour you will be surprised how well and reliable those indices trend. It makes them the perfect instrument for swing trading. The somewhat difficult part is to calculate currency baskets mirroring these indices and the execution. An experienced programer shouldn't have big problems. Once that's done you have perfect synthetic but tradable instruments almost nobody in the market is aware of. Combined with the huge capacity this alone (the unawareness of most market participants) gives you a big exploitable edge.


From Sierra's text on their site I assumed they normalize all major pairs as indexes each and then take simple averages of the index values.

Did you do the calc on your end to see what formula Sierra uses ?

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  #6 (permalink)
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MT4Survivor View Post

If you analyze the behaviour you will be surprised how well and reliable those indices trend. It makes them the perfect instrument for swing trading. The somewhat difficult part is to calculate currency baskets mirroring these indices and the execution. An experienced programer shouldn't have big problems. Once that's done you have perfect synthetic but tradable instruments almost nobody in the market is aware of. Combined with the huge capacity this alone (the unawareness of most market participants) gives you a big exploitable edge.

My experience. I have gone on this route previously . While I do agree there are certain edges in it ( it basically reduce the volatility - pretty much like spreading), it can complicate trading unnecessarily

Very often if one trades a basket of currencies, you will realized it actually mirror one of the major pair with a smoother curve. In forex, we are mostly just trading the USD - no matter which pair we are trading. I ended up going back to trading the pair out right which is mirrored by the basket. because you get into profit faster and with lesser margin. If you profit with the synthetic, you would profit with the pair just with more volatility

Having said that, if one have a huge account and is good with maths and programming, this is definitely one area to look into.

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