Mirror Trader - Automated Strategies and Trading Signals

[Jason Rogers]

Here's an update on the Momentum2 trading signal to short GBP/USD from yesterday.

Quote from Jason Rogers:

Rodriguez called attention to the fact that the sentiment-based Momentum2 strategy on DailyFX PLUS has now gone in the opposite direction. This could represent an important turning point for the US currency.

The weekly update from the Speculative Sentiment Index (SSI) that was posted on DailyFX.com adds further confirmation that the US Dollar may have set a lasting bottom versus the Euro, Australian Dollar, and British Pound.

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

It shows that traders have dramatically reduced their long dollar positions against these major currencies. Since SSI is a contrarian indicator, this shift in sentiment could be a sign of further US Dollar gains to come.

The fact that that the SSI-based Momentum2 strategy on DailyFX PLUS has now sold EUR/USD, GBP/USD, and AUD/USD serves as early confirmation of a potentially lasting Dollar bounce.

Momentum2 is available as an automated strategy on the Mirror Trader platform. FXCM account holders can use their Trading Station username and password to log into Mirror Trader.

 

[Jason Rogers]

Another update on the GBP/USD short position entered by the Momentum2 strategy on Mirror Trader earlier this week:

Quote from Jason Rogers:

Momentum2 is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The strategy looks to buy when SSI reaches its lowest value for the past 145 trading hours, and looks to short when it reaches its highest value for the past 145 trading hours.

The strategy is giving a signal to short GBP/USD because SSI hit its most extreme positive level for the past 145 trading hours, which suggests that the GBP/USD could be trending downwards. The trailing stop loss has been set at 1.61467.

The trade is now floating a 100+ pip profit, but is nearing a the 23.6% Fibonacci retracement at 1.59184 for the lows set back in July. It's possible the pair might find some support here as it did in mid-October.

While it may be prudent to take some partial profits here, there are reasons to leave the rest of the position open with the trailling stop which has since moved down to 1.60333.

Instraday Price Perspective from Strong/Weak app

In particular, the Strong/Weak app shows that the British Pound has been underperforming noticeably on short-term time frames (m15, H1) after this morning's data even more than the Euro.This could be a sign that a more significant technical breakdown may be beginning.

 

[Jason Rogers]

Another update on the GBP/USD short position entered by the Momentum2 strategy on Mirror Trader last week:

Quote from Jason Rogers:

Instraday Price Perspective from Strong/Weak app

In particular, the Strong/Weak app shows that the British Pound has been underperforming noticeably on short-term time frames (m15, H1) after this morning's data even more than the Euro.This could be a sign that a more significant technical breakdown may be beginning.

The latest readings from the Speculative Sentiment Index (SSI) indicate that cable (GBP/USD) could still continue lower. The ratio of long to short positions in the pair stands at -1.75 as 36% of traders are long.

Yesterday the ratio was -2.38; 30% of open positions were long. Long positions are 15.0% higher than yesterday and 28.5% above levels seen last week. Short positions are 15.4% lower than yesterday and 28.9% below levels seen last week.

Since SSI is a contrarian indicator to price action, the fact that the trading crowd has grown less net-short from yesterday and last week is an indication that cable could continue lower.

The SSI-based Momentum2 strategy on Mirror Trader is still short GBP/USD from 1.60477 with the trailing stop having since moved down to 1.60043.

 

[Jason Rogers]

One final update on the GBP/USD short position from last week: The trade finally closed out for a profit when the trailing stop at 1.60063 was hit.

Also, here's a video that DailyFX currency strategist Ilya Spivak posted yesterday about how to use the currency baskets on Mirror Trader.

<iframe width="853" height="480" src="//www.youtube.com/embed/5wyomOSy8hE" frameborder="0" allowfullscreen></iframe>

 

[Jason Rogers]

Here's what Quantitative Strategist David Rodriguez had to say about the latest update from our Speculative Sentiment Index (SSI) that was just posted on DailyFX.com today:

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

"The US Dollar surged versus the Euro following the European Central Bank rate decision, but a substantial shift in sentiment warns of an important EUR/USD bottom.

"A massive decline in the Euro/US Dollar has been met with an aggressive wave of retail FX profit-taking, leaving crowds at their least net-short Euro since it traded to $1.31 in November. Today’s important swing in positions means that their next trades may actually be USD short orders (EUR/USD, GBP/USD longs)."

In fact, the SSI-based Momentum2 strategy on the Mirror Trader platform has just opened a GBP/USD long position at current levels with a trailing stop at 1.5995. FXCM account holders can use their Trading Station username and password to log into Mirror Trader.

 

[TrendPlayer]

If many people are mirroring the same signal, doesn't that mean that there will possibly be someone who suffers a loss due to a bunch of front runners?

 

[Jason Rogers]

Quote from TrendPlayer:

If many people are mirroring the same signal, doesn't that mean that there will possibly be someone who suffers a loss due to a bunch of front runners?

Hi TrendPlayer,

That's a great question, but the volume generated by any one signal even a popular one is still very small compared to the overall volume being traded in currencies. That's one of the advantages of the greater liquidity available in forex relative to other markets.

Jason

 

[Jason Rogers]

After a week of rises and falls, the Dow Jones FXCM Dollar Index finally established itself above last week’s high on the release of unexpectedly strong US change in Non-Farm Payrolls.

The Momentum1 and Momentum2 trading strategies from DailyFX PLUS are now giving signals to short AUD/USD to go along with a previous short signal that was given by Breakout2 earlier.

All three trading signals are available as automated strategies on the Mirror Trader platform. You can use your FXCM Trading Station username and password to log into Mirror Trader.

 

[Jason Rogers]

In my last post, I mentioned recent DailyFX PLUS Trading Signals to short AUD/USD. Now the Breakout2 strategy has given a signal to buy EUR/USD. Combining these signals, it's no surprise that the latest indication from the Momentum2 strategy is the buy EUR/AUD.

Momentum2 is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The signal was issued because the Speculative Sentiment Index (SSI) has hit its most extreme negative level for the past 145 trading hours at -3.04428, which suggests that EUR/AUD could be trending upwards.

Momentum2 is available as an automated strategy on the Mirror Trader platform. FXCM account holders can use their Trading Station username and password to log into Mirror Trader.

 

[Jason Rogers]

The Momentum2 strategy from DailyFX PLUS has just given a signal to buy GBP/USD at current levels.

Momentum2 is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The current signal was issued because the Speculative Sentiment Index (SSI) has hit its most extreme negative level for the past 145 trading hours at -2.8833, which suggests that the GBP/USD could be trending upwards.

Momentum2 is available as an automated strategy on the Mirror Trader platform. FXCM account holders can use their Trading Station username and password to log into Mirror Trader.