Trading the currency markets is a complex business. With so many pairs and multiple timeframes it is almost impossible to monitor them all – but with the Currency Heatmap you can. The Currency Heatmap indicator delivers the information you need to base your trading decisions on the entire spectrum of currency pairs derived from the 8 major currencies: namely the US dollar, the Euro, the British Pound, the Swiss Franc, the Japanese Yen, the Canadian Dollar, the Australian Dollar and finally the New Zealand Dollar. In one clear and simple table, you can see instantly the entire weight of market sentiment across all 28 pairs and across all timeframes. A global view of risk and sentiment on one chart.
It instantly displays the “hottest” and “coldest” areas of the financial landscape. Vertically, 28 currency pairs are listed and ranked from the most bullish (top) to the most bearish pair (bottom) and reflect the data ranking on the associated currency matrix indicator. And this is where it gets interesting: horizontally, the performance scores of each currency pair are displayed in 10 timeframes namely 1 minute, 5 minutes, 10 minutes, 15 minutes, 30 minutes, hourly, 4 hours, daily, weekly, and monthly.
Interpreting the colors
Each cell of the Currency Heatmap indicator is color coded making it possible to interpret it instantly with just a glance, much like looking at a sophisticated thermal imagery scanner, but for Forex. If you check out the indicator, you’ll see how easy and intuitive it is, but let’s just expand on them here.
If we start with the performance scores. This is the value the indicator assigns to each currency pair representing how positively or negatively its price moved over a certain period. The Currency Heatmap calculates the performance scores the same way the Currency Matrix does but with a slight difference due to minor data constraints which does not affect the accuracy of the indicator in any way. The cells can be any of the two colors depending on the performance score. This is the color coding used when viewing the currency pairs ACROSS the 10 timeframes or what we like to call the time horizon:
- Green – if the currency pair’s performance score for the aligned timeframe is POSITIVE.
- Red – if the currency pair’s performance score for the aligned timeframe is NEGATIVE.
However, the pairs are then ranked VERTICALLY using a dynamic graded color code transitioning from green, to yellow, and to red in that order. The performance scores of the currency pairs in 10 timeframes are added together. The currency pairs are then ranked by their sum from the most positive to the most negative and are color coded as follows:
- Green shades – the sum of the currency pair’s performance scores in 10 timeframes is well above the fulcrum of zero.
- Yellow shades – the sum of the currency pair’s performance scores in 10 timeframes is relatively flat and around the fulcrum of 0. It can either be positive or negative but trails the numbers closest to 0.
- Red shades – the sum of the currency pair’s performance scores in 10 timeframes is well below the fulcrum of zero.
The gradation of color is dynamic and hence the transition of colors will depend entirely on the sum of the currency pair’s performance scores in 10 timeframes as explained above. As with all our other indicators, this is dynamic and is constantly shifting in real time to reflect the ebb and flow of sentiment across the timeframes.
Weight of the timeframes
One important factor to consider when interpreting the Currency Heatmap indicator and the ranking aspect, is the fact that the performance scores in each timeframe inherently possess weight, and this is reflected in how the indicator has been developed. As you can appreciate, the weight of sentiment in a slower timeframe is greater than that in a faster timeframe. Simply put, the weight of each timeframe is directly proportional to the timeframe itself. Faster timeframes carry less weighting to the overall ranking, whilst slower timeframes carry more. This means currency pairs ranking near or at the bottom of the ladder (bearish) are most likely to have red cells through the slower timeframes or the columns at the right-hand side of the indicator. Similarly, the currency pairs at the top and ranking as bullish or very bullish, again are most likely to have green cells through the slower timeframes.
Stepping back, the changing colors deliver a heatmap reflecting the relative performance of the 28 currency pairs across ALL timeframes in real time. This gives a horizontal analysis of the currency pairs across time. Immensely powerful. And empowering you as a trader to make clear, logical and fast decisions.
The Currency Heatmap indicator allows you to filter the currency pairs relevant to the currency you are analysing. Just like the Quantum Currency Matrix indicator, a set of toggle buttons are available for this purpose which is located at the chart toolbar.
- USD is the red button which filters out and displays all currency pairs containing the US Dollar.
- EUR is the orange button which filters out and displays all the currency pairs containing the Euro.
- GBP is the yellow button which filters out and displays all the currency pairs containing the British Pound.
- CHF is the green button which filters out and displays all the currency pairs containing the Swiss Franc.
- JPY is the blue button which filters out and displays all the currency pairs containing the Japanese Yen.
- CAD is the purple button which filters out and displays all the currency pairs containing the Canadian Dollar.
- AUD is the magenta button which filters out and displays all the currency pairs containing the Australian Dollar.
- NZD is the white button which filters out and displays all the currency pairs containing the New Zealand Dollar.
Click then once to filter, and then click again to remove the filter. When a certain currency filter is in effect, the relevant currency pairs in the table appear colored while the others are not.
Here are some further details on the Currency Heatmap indicator to help you get started:
Before attaching the indicator to a chart, please remember to set the timeframe to DAILY, otherwise the indicator will not work.
For best results, please use the Quantum Currency Heatmap in a forex chart preferably one with high tick rate like EURUSD and other USD pairs.
The indicator occupies the chart panel itself. We recommend expanding the chart until you get a complete view of the indicator.
When you first apply the indicator, please allow a few seconds for the data to build in history.
By itself, the Quantum Currency Heatmap indicator is a powerful trading tool for identifying trading opportunities, quickly, easily on a single chart. However, its development is part of a new indicator bundle that we like to call the Quantum Currency Dashboard which consists of the following indicators:
- Quantum Currency Strength Indicator (CSI)
- Quantum Currency Matrix
- Quantum Currency Array
- Quantum Currency Heatmap
These four indicators then provide a unique and compact insight into all the various aspects of strength and weakness for both currencies and currency pairs from trend and momentum to overbought and oversold. What is unique is that using four charts you are then able to monitor the myriad combinations of strength, weakness, momentum, congestion and divergence across the entire forex complex at a click of a button. And even more powerfully giving you the confidence to get in and stay in for maximum profits. No more missed opportunities, no more struggling with multiple charts, and no more trader regret whatever your trading style approach.
Open your NinjaTrader 8 platform and select a chart.
Right click the chart to bring up a menu which looks like the following image:
Select Indicators… which will open the following window. Alternatively, you can open this window by clicking the Indicators button in the chart toolbar or by pressing Ctrl + I while focused on the chart.
In the Indicators window under Available section, go to Quantum > Quantum Currency Heatmap and click it to select the indicator. Once selected, click “add” under the Configured section which will put it on the list of active indicators to be added in the chart.
Before clicking the OK or Apply button to complete, the indicator has several configurable options. You can click the Apply button at any time, and this will apply any changes you have made to the indicator without closing the window. This will allow you to see the changes you have made to the indicator, without closing with the OK button or the Cancel button.
All user input can be configured at the right-hand side of the Indicators window under the Properties section. These are the default settings when you add the indicator in a chart.
The following settings affect the indicator’s alert notifications displayed in the Alerts Log. You can open the Alerts Log from your NinjaTrader 8 client’s menu bar in the main window at New > Alerts Log.
Alert On Strongest Pair Change
When enabled, the indicator sends an alert notification in the Alerts Log when the top currency pair in the ranking changes.
Alert On Weakest Pair Change
When enabled, the indicator sends an alert notification in the Alerts Log when the bottom currency pair in the ranking changes.
Alert Rearm Time (Seconds)
This adds a delay to the next alert notification, expressed in number of seconds.
Alert BG Color
This setting allows you to customize the background color of the indicator’s messages as they appear in the Alerts Log.
Alert Text Color
This setting allows you to customize the color of the text as the indicator’s messages appear in the Alerts Log.
Alert Sound File
You can change here the sound file the platform uses when this indicator triggers an alert. By default, it uses the Alert1.wav file packaged with your NinjaTrader installation. Please make sure that the file is supported and the absolute path to the sound file is entered correctly.
The Currency Heatmap calculates the performance of each currency pair within a certain period. This setting defines the length of this period which starts from the Look Back bar up to the current bar and it is applied to every given timeframe.
USD Button Color
Sets the color of the USD toggle button.
EUR Button Color
Sets the color of the EUR toggle button.
GBP Button Color
Sets the color of the GBP toggle button.
CHF Button Color
Sets the color of the CHF toggle button.
JPY Button Color
Sets the color of the JPY toggle button.
CAD Button Color
Sets the color of the CAD toggle button.
AUD Button Color
Sets the color of the AUD toggle button.
NZD Button Color
Sets the color of the NZD toggle button.
Bookmarked Currency Pairs
This helps you keep track of currency pairs wherever they are in the Currency Heatmap. To bookmark a currency pair, simply enter its symbol (without any prefix or suffix) in this field like so:
You can bookmark multiple currency pairs at the same time by adding a space between them. For example, if you like to bookmark EURUSD, AUDCHF and USDJPY, simply enter the following value in this field:
eurusd audchf usdjpy
All bookmarked currency pairs are given a distinct color so you can see them easily in the constantly changing list. They are also not affected by the currency filters.
Increase Cell Size
Increases the size of the indicator’s grid cells in increments of 1. It can be any value from 0 to 15.
Increase Font Size
Increases the size of the text within the indicator in increments of 1. It can be any value from 0 to 10.
Opens the indicator Input Series dialogue which allows you to select the source of data for your indicator’s calculations.
Sets the frequency at which the indicator performs its calculations.
The label of the indicator’s instance displayed on the chart.
Maximum bars look back
Determines the maximum number of bars the indicator can look back to perform calculations on historical data. This is set to 256 by default (the most memory-friendly setting), but it can be changed to “infinite” to allow for a greater look back period.
When enabled, the indicator will be included in the chart panel’s vertical automatic scaling.
Sets the number of bars by which to displace the indicator plots.
Display in Data Box
Enables or disables the inclusion of the indicator’s plot values in the Data Box
Sets the panel in which the indicator is plotted. If you select “Same as input series,” the indicator will be linked to the Input Series and automatically move if the Input Series is modified to a different panel.
When enabled, the indicator value is plotted in the axis selected under the “Scale Justification” property.
Sets the scale on which the indicator will be plotted. Possible values are “Right,” “Left,” and “Overlay”.
Enables or disables visibility and function of the indicator on the chart.
Unloading the indicator
Here are the steps to remove the indicator in the chart.
Right-click on the chart then select Indicators… from the menu. Select Quantum Currency Heatmap from the Configured section and click “remove” then OK to confirm and the indicator should be unloaded from your chart.