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 MT5 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 MT5 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 MT5 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 tree 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 Quantum USDX. These options are grouped and can be accessed by selecting the tabs which will be discussed further in the following sections. Once you are done customizing the indicator’s options, click OK to run the indicator.
You can find here basic information about the indicator like its name, description, and version number.
You can configure the indicator by changing its variables listed in this tab. We will discuss further each configurable input of the Quantum USDX below.
All the plots of the Quantum USDX can be configured in this tab. It contains 1 candlestick plot and 1 line plot which you can both customize the appearance.
The first plot is the CandlestickChart which uses 3 colors: (1) Whitesmoke for the wick, (2) DodgerBlue for the bullish candle body and (3) Red for the bearish candle body. To change the color, double-click any of the three color boxes transforming the field to a drop down menu which you can click again to select a new color. Width and style cannot be customized in candlestick plots.
The second plot is the LineChart. Please note that this plot is only visible when Line Chart Mode is on. This is set to Chartreuse by default but you can change this by double-clicking its color box. The field will transform to a drop down menu which you can click again to select a new color. You can also customize the line’s width and style
This indicator does not use any Levels so this tab is empty.
This tab contains options to change the scale of how the indicator is displayed in the chart. We do not recommend changing any of the values here and it is best to just leave it as it is.
The indicator’s visibility can be toggled on or off in different contexts with the options in this tab.
Please make sure that the “Allow DLL imports…” option is checked/ticked before running the indicator. This is required by all Quantum indicators to properly communicate with its accompanying DLL file. Alternatively, you can set this option globally by selecting in the main menu, Tools > Options > Expert Advisors tab and checking/ticking the “Allow DLL imports” option.
Configuring the Indicator
Let’s go back to the Inputs tab and explore the ways on how to customize the settings of your Quantum USDX.
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.
This setting defines the number of bars the indicator processes and this is also the number of bars it displays on the chart. It is set to 200 by default.
Line Chart Mode
The Quantum JPYX indicator uses a candlestick plot by default but if this field is set to true, it will use a line plot to display the index.
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.
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.
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.
Applying a Moving Average Indicator Over Quantum JPYX
You can add the native Moving Average indicator over your instance of Quantum USDX. This is especially useful if you intend to look for MA crossovers. Here’s how:
- Add your Quantum USDX to your chart.
- Go to your Navigator and find the Moving Average indicator under Indicators > Trend tree.
- Click Moving Average and drag it over your Quantum USDX chart. A new window appears.
- In the Parameters tab, select Previous Indicator’s Data in the Apply to field.
- Once you make adjustments to its other parameters, click OK.
- If the Moving Average is not displaying correctly, simply change the timeframe back and forth to update the chart.
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.