Free Forex Indicators (MT4), Trend Following Indicators

Currency Heat Map

A currency heatmap is an indicator designed to understand the performance of one currency in comparison with other currencies. The relative performance of various currencies can be very useful in decision making because all forex pairs are correlated.

A currency correlation in forex is a positive or negative relationship between two separate currency pairs. A positive correlation means that two currency pairs move in tandem, and a negative correlation means that they move in opposite directions.

Let’s try to understand that how we can use the heatmap to gain an edge in any trading system.

Currency Heat Map Overview

Heatmap indicates the relative strength of one currency against another. Names of the currencies are written on the left side and top of the heatmap. When heatmap shows a dark or light green color in Matrix, that means currency written on the left side is strong as compared to currency written on the top of the heat map.

Currency Heat Map Overview

Traders should do long trades in such strong currency written on the left side with any other currency. When heatmap shows dark or light red color in Matrix, that means currency written on the left side is weak as compared to currency written on the top of the heat map.

Traders should do short trade in such weak currency written on the left side with any other currency.

Also Read: Candlesticks Pattern

Currency Heat Map Explanation

When heatmap shows the signal that some currency is weak as compared to all other and some other currency is strong as compared to all other.. then traders should select the currency pair accordingly and sell the weak currency and buy the strong currency.

Currency Heat Map Explanation

In the above example, AUD and NZD are strong as compare to all other currencies. So traders should look to buy any pair beginning with AUD or NZD. Heat map can also be used as a decision support system along with another trading system.

Currency Heat Map: Buy Conditions

Currency Heat Map Buy Parameters

One currency should show strength as compare to all other currencies.
Strength should be visible on 4h and daily heatmap.
Traders can buy the strong currency against any Weak currency.

Get: Forex No Deposit Bonus

Currency Heat Map: Sell conditions

Currency Heat Map Sell Parameters
  • One currency should show strength as compare to all other currencies.
  • Strength should be visible on 4h and daily heatmap.
  • Traders can buy the strong currency against any Weak currency.

Recommended Brokers

Share on:

I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

Leave a Comment

About Trend Following System

Trend Following System's goal is to share as many Forex trading systems, strategies as possible to the retail traders so that you can make real money.

Risk Warning: Trading in the forex market is very risky. Thus, it is may not be for everyone. A highly leveraged position can work against the trader when the trade does not work as expected. Trading in the forex market can cause to lose a significant portion of the capital or all of the capital. It is crucial to learn about the trading and gain enough experience in the demo account before trading with real money. The trading strategies published on this website do not guarantee profit as the market is dynamic and unpredictable. The past performance of a strategy is not the indicative of future performance. Trend Following System will not accept any kind of liability or damage caused by trading the strategies published on this website.