General – Getting Started
Trading the currency markets is a complex business. With so many pairs and multiple timeframes it is almost impossible to monitor them all – but with with the Currency Heatmap you can. The Currency Heatmap indicator delivers the information you need to base your trading decisions on the entire spectrum of currency pairs derived from the 8 major currencies; namely the US dollar, the Euro, the British Pound, the Swiss Franc, the Japanese Yen, the Canadian Dollar, the Australian Dollar and finally the New Zealand Dollar. In one clear and simple table, you can see instantly the entire weight of market sentiment across all 28 pairs and across all timeframes. A global view of risk and sentiment on one chart.
It instantly displays the “hottest” and “coldest” areas of the financial landscape. Vertically, 28 currency pairs are listed and ranked from the most bullish (top) to the most bearish pair (bottom) and reflect the data ranking on the associated currency matrix indicator. And this is where it gets interesting: horizontally, the performance scores of each currency pair are displayed in 9 timeframes namely 1 minute, 5 minutes, 15 minutes, 30 minutes, hourly, 4 hours, daily, weekly and monthly.
Interpreting the colors
Each cell of the Currency Heatmap indicator is color coded making it possible to interpret it instantly with just a glance, much like looking at a sophisticated thermal imagery scanner, but for Forex. If you check out the indicator, you’ll see how easy and intuitive it is, but let’s just expand on them here.
If we start with the performance scores. This is the value the indicator assigns to each currency pair representing how positively or negatively its price moved over a certain period. If you have the Currency Matrix indicator, you’ll also notice that the figures are exactly the same. This is because both use the same algorithm in calculating the performance scores. The cells can be any of the two colors depending on the performance score. This is the color coding used when viewing the currency pairs ACROSS the 9 timeframes or what we like to call the time horizon:
- Green – if the currency pair’s performance score for the aligned timeframe is POSITIVE.
- Red – if the currency pair’s performance score for the aligned timeframe is NEGATIVE.
However, the pairs are then ranked VERTICALLY using a dynamic graded color code transitioning from green, to yellow, and to red in that order. The performance scores of the currency pairs in 9 timeframes are added together. The currency pairs are then ranked by their sum from the most positive to the most negative and are color coded as follows:
- Green shades – the sum of the currency pair’s performance scores in 9 timeframes is well above the fulcrum of zero.
- Yellow shades – the sum of the currency pair’s performance scores in 9 timeframes is relatively flat and around the fulcrum of 0. It can either be positive or negative but trails the numbers closest to 0.
- Red shades – the sum of the currency pair’s performance scores in 9 timeframes is well below the fulcrum of zero.
The gradation of color is dynamic and hence the transition of colors will depend entirely on the sum of the currency pair’s performance scores in 9 timeframes as explained above. As with all our other indicators, this is dynamic and is constantly shifting in real time to reflect the ebb and flow of sentiment across the timeframes.
Weight of the timeframes
One important factor to consider when interpreting the Currency Heatmap indicator and the ranking aspect, is the fact that the performance scores in each timeframe inherently possess weight, and this is reflected in how the indicator has been developed. As you can appreciate, the weight of sentiment in a slower timeframe is greater than that in a faster timeframe. Simply put, the weight of each timeframe is directly proportional to the timeframe itself. Faster timeframes carry less weighting to the overall ranking, whilst slower timeframes carry more. This means currency pairs ranking near or at the bottom of the ladder (bearish) are most likely to have red cells through the slower timeframes or the columns at the right hand side of the indicator. Similarly, the currency pairs at the top and ranking as bullish or very bullish, again are most likely to have green cells through the slower timeframes.
Stepping back, the changing colors deliver a heatmap reflecting the relative performance of the 28 currency pairs across ALL timeframes in real time. This gives a horizontal analysis of the currency pairs across time. Immensely powerful. And empowering you as a trader to make clear, logical and fast decisions.
The Currency Heatmap indicator allows you to filter the currency pairs relevant to the currency you are analysing. Just like the Quantum Currency Matrix indicator, a set of buttons is provided below the table and displayed horizontally.
- USD is the red button which filters out and displays all currency pairs containing the US Dollar.
- EUR is the orange button which filters out and displays all the currency pairs containing the Euro.
- GBP is the yellow button which filters out and displays all the currency pairs containing the British Pound.
- CHF is the green button which filters out and displays all the currency pairs containing the Swiss Franc.
- JPY is the magenta button which filters out and displays all the currency pairs containing the Japanese Yen.
- CAD is the purple button which filters out and displays all the currency pairs containing the Canadian Dollar.
- AUD is the blue button which filters out and displays all the currency pairs containing the Australian Dollar.
- NZD is the white button which filters out and displays all the currency pairs containing the New Zealand Dollar.
The buttons work on a toggle basis. Click them once to filter, and then click again to remove the filter. When a certain currency filter is in effect, the relevant currency pairs in the table appear in square brackets as in [EURUSD]. Meanwhile, all relevant currency pairs in the array are the only ones displayed.
Here are some further details on the currency heatmap indicator to help you get started:
- Your Quantum Currency Heatmap indicator can be applied to any chart for any currency pair. The chart does not influence or affect the appearance or performance of the indicator. For example, you can apply the indicator to a EURUSD, a GBPUSD, or a USDCHF, or any other pair. The indicator will display in an identical way on each chart AND each timeframe.
- The indicator occupies the chart panel itself. We recommend expanding the chart until you get a complete view of the indicator.
- The indicator works in all MT4 timeframes.
- When you first apply the indicator, please allow a few seconds for the data to build in history. You may need to switch timeframes once or twice before the indicator builds in real time, once the history has been created. This should only occur on the first installation.
- PLEASE NOTE: many FX brokers deliver their MT4 platforms with unique currency pair notations, which vary from the standard notation as in EURUSD, USDJPY and NZDUSD. These unique currency notations can be anything from a full stop, to colon, or letters and numbers and can be either before the symbol (which we call a “prefix”) or after the currency notation (which we call a “suffix”). In either case the prefix or suffix will need to be added when configuring the indicator, otherwise it will not work. This is explained further later in the guide.
By itself, the Quantum Currency Heatmap indicator is a powerful trading tool for identifying trading opportunities, quickly, easily on a single chart. However, its development is part of a new indicator bundle that we like to call the Quantum Currency Dashboard which consists of the following indicators:
- Quantum Currency Strength Indicator (CSI)
- Quantum Currency Matrix
- Quantum Currency Array
- Quantum Currency Heatmap
These four indicators then provide a unique and compact insight into all the various aspects of strength and weakness for both currencies and currency pairs from trend and momentum to overbought and oversold. What is unique is that using four charts you are then able to monitor the myriad combinations of strength, weakness, momentum, congestion and divergence across the entire forex complex at a click of a button. And even more powerfully giving you the confidence to get in and stay in for maximum profits. No more missed opportunities, no more struggling with multiple charts, and no more trader regret whatever your trading style approach.
When applying the indicator to the chart, there is an option on all MT4 charts which allows the chart to always appear in the foreground. If this is not disabled, the chart will appear on top of the Quantum Currency Heatmap indicator and NOT behind it. The default setting is to have the chart in the foreground which must be changed. This is done as follows:
Open your MT4 platform and in the top level navigation:
- Left click >File>New Chart
- Left click a chart from the pop up window ( the indicator will work on any chart and is works entirely independently of the chart to which it is applied)
- Right click on the chart
- Left click>Properties from the pop up menu
This will display the following window:
- Left click>Common which will then display the following window:
If it is checked, please ensure it is then unchecked which will then move the chart to the background, and the currency matrix indicator will then be in the foreground when it is applied to the chart.
Left click>OK to save and return to the chart. The installation process is described below:
- Left click >View
This will open the following window:
- Left click > Navigator
This will open the following window:
- Left click > + icon alongside Custom Indicators
This will open the following window:
- Left click and HOLD – drag the QuantumCurrencyHeatmap indicator to a chart, and RELEASE
This will then display the following window. This is where you can configure all the various user settings for your currency matrix indicator. To move from one tab to another simply left click on the grey tab to select the appropriate window.
The Common tab displays two boxes. Both of these should be checked as shown. This ensures that you have enabled the DLL imports as explained in the installation instructions.
The default settings are as shown above.
This is the number of bars that the indicator processes during the calculation. The Quantum currency matrix indicator requires a significant amount of processing power compared to most indicators, and this is the recommended setting. The higher the setting then the more processing power is required and we suggest it remains at 7, although you can change this if you wish.
This is the size of the letters in the entire indicator. You can adjust its value to your liking.
- USD button color
- EUR button color
- GBP button color
- CHF button color
- AUD button color
- CAD button color
- JPY button color
- NZD button color
- USD button text color
- EUR button text color
- GBP button text color
- CHF button text color
- AUD button text color
- CAD button text color
- JPY button text color
- NZD button text color
To change the color of one or more of your currency buttons:
- Double left click in the Value field
- Select the color from the drop down menu by clicking on the drop down arrow to display the menu of colors
- Left click OK to confirm
This will then activate the color for your currency.
This is the variable field that you will need to update, if your FX broker delivers your currency pairs with a prefix. As an example this might be a.EURUSD, in which case you would need to enter the value “a.” in the currencyPrefix field. If your currency pairs are delivered with a prefix, then you MUST enter this in this field, otherwise your indicator will not work.
This is the variable field that you will need to update, if your FX broker delivers your currency pairs with a suffix. As an example this might be EUR/USDm, in which case you would need to enter the value m in the currencySuffix field. If your currency pairs are delivered with a suffix, then you MUST enter this in this field, otherwise your indicator will not work.
There is no further customization needed here.
There is no further customization needed here.
When you are happy with all your changes…
- Left click the OK button at the bottom of the window, and your Quantum currency matrix indicator will be applied to your chart
At this point your Currency Heatmap indicator will look like this:
Finally, to remove the indicator from your chart:
- Right click on the chart and the following pop up window will appear:
- Left click on Indicators List from the above menu and the following menu will appear:
- Left click the indicator, and then left click the Delete button on the right and the indicator will be removed from the chart.