This project is an analysis done on the forex prices from MetaTrader5 (MT5). The analysis is in the form of a dashboard, which have the following features:
- Currency Strength Analysis
- Currency Coorelation
- Risk Management Analysis
- Price action trading
- Support and Resistance
- Relative Strength Index (RSI) Divergences
- Multi-timeframe Analysis
In the trading community, it is recommended that you should have two different charts when viewing the same forex market: one for analysis, one for making your trades. Hence, the need for a second dashboard (which is this project itself! 😆).
The main tools used for this project are:
- MetaTrader5 API: For fetching prices
- Plotly: Data Visualization purposes
- Dash: Dashboard framework
- Others: Other tools for the purpose of technical analysis
- Observe the Currency Strength Analysis
- Symbols divided into two categories: Uptrend or Downtrend
- The strength of the trend is divided into two: Weak or Strong
- Based on the symbols, download the weekly activity of the previous week
- Check if the symbols were actively traded or not
Hypothesis: A symbol that is not commonly traded will have a wider spread.
In addition, check the coorelation of the chosen symbols. Symbols that are strongly coorelated (either positively or negatively) should be narrowed down as much as possible, or discarded as well.
Economic events can be downloaded for the current day only. It is divided into:
- Currency: The given currency affected
- Time: The time at which the economic event takes place
- Impact: How big of an impact is the economic event
- When observing the market, highlight temporary key areas. Remove them by the end of the day and plot again the next day.
- When looking for an entry point, be flexible. Always be able to trade in more than one way.
- Exit when you are wrong. That is when your entire trade set up becomes invalid. Set up your stop-loss at this area.
- Adjust your stop-loss every time you cross a profit level. For example: if you cross 100 points of profit, adjust your stop-loss to that level. It is better to lock your profits and exit than to hope that the price continues going in the intended direction.
- The ideal entry position is when the stop-loss is not too far away. Worst-case scenario: a wider-stop loss and the market reverses completely.
- RECOMMENDED: Do not keep re-adjusting your stop-loss. If it is invalid, walk away.
- RECOMMENDED: Have patience. Let the price come to the area of value. Never enter a trade unknowingly
- Scalping: Going against the trend (ex. Retracing) when the price has not reached the area of value. Good for quick profits but highly risky.
- RSI does not work well when the market is in consolidation
If you wish to learn about forex trading and the concepts related to it, I highly recommend the following:
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Rayner Teo: Contains a lot of information and examples regarding a lot of information related to pricing and area of value (I learned MAEE from here).
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The Moving Average: Good information and visual explanation on how different concepts of indicators works (I love the re-test explanation here, as well as the importance of patience).
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Babypips: A lot of humerous explanations on the different trading concepts.
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Technical Analysis Of The Financial Markets: A good book that explains the logic on why the price behaves as it is and detailed information on the indicators.
NOTE: These are just the resources that I learned from mainly. There are tons of research, blogs, and videos available on the internet that explains price action as well. Hence, do take it with an open mind :)