At Quantum Trading, we like to give you a choice, and to offer what we believe are the ‘best of breed’ alternatives to those indicators that many traders use. And this is another example. Many forex traders rely on the DXY indicator to signal strength and weakness in the US dollar, and this works perfectly well. It is an index that has been around for over 30 years. However, times change, and none more so than in the forex market in the last five years. The US dollar still accounts for over 87% of currency transactions, but the significance of other currencies is growing fast, and the general view is that the DXY is perhaps not so relevant as it once was, given the constituents of the underlying basket of currencies. Perhaps the three most glaring anomalies are the heavy weighting of the European currencies, the exclusion of the Australian dollar, and the minor weighting of the Japanese yen.
Whilst there are new indices being developed all the time, and indeed Bloomberg have recently launched the BBDXY as an alternative, we believe that simplicity is the key, and have therefore developed the USDX index for the MT4 platform. This is based on the FXCM/Dow Jones index, and takes four major currencies, with an equal weighting to deliver the USDX index as follows:
- Japanese yen (JPY) – 25%
- Australian dollar (AUD) – 25%
- Euro (EUR) – 25%
- British pound (GBP) – 25%
The index is based on a notional 10,000 mini lot contract size and unlike the DXY is therefore quoted to five figures and two decimal places. It is our belief that this simple index provides a ‘real world’ view of strength and weakness in the US dollar, with a more representative sample of world currencies. But why not try both – and see which you prefer!
Like the QuantumDXY indicator, the Quantum USDX indicator can be used in one of three ways:
- First, as an inverse indicator to a major currency pair, helping you get in, stay in and get out
- Second, as a confirming indicator for the Quantum Currency Strength indicator, providing a perspective against other currencies
- Finally, as the ultimate barometer of risk
Whichever approach you adopt, you will no longer have to leave your MT4 platform for a view of the US dollar! In addition, the indicator is also supplied with two moving averages already applied, the 8 SMA and the 14 SMA to help provide you with further insights into market direction.
- The Quantum USDX indicator works in all timeframes.
Applying the Indicator
Open your MT4 platform and in the main menu, select View > Navigator to open the Navigator window which appears at the left hand side of your workspace.
In the Navigator window, expand the Indicators tree by clicking the “+” symbol. Find the Quantum section and expand it by clicking the “+” once again to reveal the full list of Quantum Trading indicators.
To start using the indicator, you can click and drag QuantumUSDX from the Navigator to a chart or you can also double-click QuantumUSDX (which will then be applied to the currently selected chart). Doing either one of these will display the Custom Indicator window where you can configure all the various user settings for your indicator. These options are grouped and can be accessed by selecting the tabs. Once you are done customizing the indicator’s options, click OK to run the indicator.
How to access standalone chart through Offline Charts
Immediately after applying the indicator to a chart, it displays the USDX in line chart mode and a box containing instructions to display the index in a standalone chart window.
Proceed by going to the main menu then select File > Open Offline which will display the Offline Charts window.
Scroll down the list to find the name of the Offline Chart generated by the indicator. Select it then click Open.
A new chart window will open where you can run other indicators to analyze the index as a candlestick chart. Please remember that you need to KEEP the host chart (the chart where the indicator is running) OPEN to continue updating its paired standalone chart. Though the feature is called “Offline Chart”, it will tick and update alongside its host chart. Any changes to the indicator setting or chart settings (like timeframe) in the host chart will reflect to the index displayed in the standalone chart.
Configuring the Indicator
Let’s focus on the Inputs tab and explore the different options available to configure the USDX indicator:
Account Email
When running the Quantum USDX for the first time in your trading account, you need to enter the email you used to register in the Quantum Trading Indicators Enablement System – http://enable.quantumtrading.com/ as part of its verification process. You only need to do this once as the email is stored in the terminal’s global variable cache after it is entered initially. Please make sure that you enter your email correctly and exactly without any extra spaces before and after it. If you made an error, simply fill this field again to update it.
Line Chart Price Type
When the indicator is set to Line Chart Mode, you can change the price type it uses to plot its line chart using this setting. You can choose one of the following price types: Open, High, Low, and Close which is the default setting.
Font Size
Sets the size of the text in the instructions box displayed at the top of the indicator.
Currency Prefix
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.EUR/USD, in which case you would need to enter the value a. in the Currency Prefix field. If your currency pairs are delivered with a prefix, then you MUST enter this in this field, otherwise your indicator will not work.
Currency Suffix
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.
Offline Chart ID
This value serves as a suffix to the name of the Offline Chart the indicator generates. You need to change this value only if you are running more than 1 instance of the indicator in any given workspace.
Making Adjustments to the User Interface
Expanding the Indicator’s Screen Size
To expand the indicator to full size so that it fills the chart, these are the steps to follow:
- Hover your mouse pointer over the double horizontal lines marked with the red arrows above
- A small icon of two parallel lines with the words ‘click drag a border of the window’
- HOLD down the left click on your mouse, and drag these lines to the top of your chart, and release when done
- Hover your mouse over the right hand edge of the chart until a double headed arrow appears
- HOLD down the left click on your mouse, and drag the right hand edge of the chart across to the left and release when done
- Left click on the chart to make it the active window
- Left click on the zoom icon below, to expand your Quantum USDX indicator to full size. The zoom function is shown below and is found in the standard toolbar below the top level navigation.
Removing the Indicator from the Chart
Open the chart’s Indicator List window by pressing Ctrl+I. You can also right-click the chart and select Indicator List from the context menu.
Select QuantumUSDX and click the Delete button then click the Close button.
