As you gain more knowledge of the forex market to increase your earning potentials, there are several tools you could deploy to help you achieve your goals faster than you expect. One of such tools is the Forex Strength Meter.
With different currency pairs on the market, most newbies usually struggle with choosing a currency pair they would make the most profit from. A Strength Meter helps newbies traders to measure the weakness and strength of each currency in a currency pair using mathematical calculations. It supports both MT4 and MT5 trading terminals.
This post will explain what the Forex Strength Meter is all about. And the benefits of using it, how it works, as well as, issues with the tool.
What Is a Forex Strength Meter?
Strength Meter is not the usual technical indicator but a tool that is designed to help forex traders measure the strength and weakness of different currencies in currency pairs. This tool shows in real-time what’s happening on the FX market. The major difference between a forex indicator and the Forex Strength Indicator is that the latter shows “when to buy” while the later guides’ traders on what to buy.
The Strength meter shows the percentage change in prices of different currencies against each other. For instance, if we want to measure the strength of the United States dollar (USD), the strength meter will sum the strength of all the currency pairs containing the USD (e.g. AUDUSD, GBPUSD, EURUSD, USDJPY, etc.). The results of the calculation would then be used to measure the overall strength of the USD.
This meter supports both the MT4 and MT5 trading terminals. The meter is highly promising, as it is capable of not just enhancing your trading strategies, but it can jump-start your earning potentials in the shortest possible time.
There are numerous benefits of using the Strength Meter to trade the FX market. From the ease of use, eliminating unnecessary hedging to its usefulness as a short-term indicator. And the ability to signal high-risk trades, the benefits are just so evident. Let’s examine how you can benefit from using this tool.
#1. Short-term Indicator
So many veteran traders use this tool as a quick guide to determine the currencies that have the potential to rise. So, if you need a tool that would propel you to make a quick decision, the Forex Strength Meter is what you need.
#2. The Strength Meter Is Simple
It is very simple and straightforward to understand. You don’t need to be an expert trader to read and decipher the results of the Strength Meter, because it has a simple graphical representation that shows currencies that are performing poorly and those that are faring well.
#3. It Eliminates Second Guessing
Most traders struggle with the problem of second-guessing and trading with emotions. Even if you’re a novice, if you download and install the Strength Meter, you will begin to trade like a professional without the fear of losing your hard-earned money.
#4. It Is Available For Free
Another major benefit using the Forex Strength Indicator is that it is readily available for free on several marketplaces. This means you don’t have to shell out your money to pay for downloading and installation.
#5. This Tool Eliminates Unintentional Hedging
The Strength Meter can help you avoid unintentional hedging. If you can measure the correlation strength between two or more currency pairs in advance, you won’t indulge in unintentional hedging. This is what this tool will help you to achieve.
#6. Integration With Technical Indicators
The Strength Meter works perfectly well with technical indicators like the Breakout indicator, Gap indicator, MACD indicator, as well as the resistance and support indicators, among others.
#7. Entry And Exit Points
As a forex trader, knowing the accurate time to enter or exit a trade position is what you need to succeed. Therefore, this tool can help you determine that in real-time so that you don’t lose your hard-earned money to market forces.
How To Use Meter?
By now, you already know that the major job of the Strength Meter is to measure the strength or weakness of different currencies in currency pairs. The results of the meter would give you the leverage to choose a currency pair with the highest breakout potential and dump those with low-profit potentials.
Like the popular saying, “the rich get richer while the poor get poorer,” currencies also behave in the same manner. Here is what we mean – strong currencies tend to move stronger while weak currencies become weaker. With that in mind, a Strength Meter will push you to make an informed decision by trading only strong currencies.
Generally, if this tool shows one currency to be very strong and the other to be very weak, the best you can do would be to opt for the strong currency. Similarly, if the Strength Meter shows both currencies to be either weak or strong, it is best to stay away from trading those currencies.
Issues with Currency Strength Meters
The Currency Strength Meter has some issues that could impede its performance and efficiency. Some of these issues are:
1. Memory leakage
3. PC freezes
4. Whipsaw signals
5. CPU always working 24/7
6. MT4 or MT5 trading terminals freeze.
Final Remarks On Forex Strength Meter
So far, this article has informed you that: (1) a Forex Strength Meter can be used for testing the strength or weakness of a currency in a currency pair before you carry out a trade. (2) The strength meter has numerous benefits that traders can profit from. (3) The meter can help you filter out potential currency pairs from which you can make the most profit. However, that said, the Strength Meter could be the magic you’ve been longing to make a difference in your profit margin.
Like we have always emphasized, avoid using any technical tool in isolation. At best, you can combine the strength meter with at least a forex indicator to further guarantee your profitability. While the exciting part for everyone is that we have a long list of forex indicators here on our site for you skim through.