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Best Currency Strength Meter (for 2024)

Updated: Dec 2, 2023

Deciding on the best currency strength meter is a tough decision for a beginner. The differences between online offers range from free to over £100 per month.

Let's see what the differences are, and if it's worth paying for one, as a forex trader.

Some Currency Strength Meter Key Points:

  1. There are two types of currency strength meters - Technical and Fundamental.

  2. Technical currency strength meters get their strength reading from historical prices of a forex pair.

  3. Fundamental currency strength meters get their strength reading from understanding each country's economy, considering behaviour reports, interest rates and taxes.

  4. The purpose of currency strength meters is to help forex traders decide which direction each currency pair should trend in the future.

Currency Strength Meter Explained

A currency strength meter (CSM) is a tool that displays the strength or weakness of currencies using positive or negative numbers. Suppose it's a technical currency strength meter. In that case, it will use historical price action to decide the strength reading—conversely, fundamental currency strength meters, or macro currency strength meters, use leading economic reports.

Strong currencies are associated with a long bias (to buy the currency), and weak currencies are associated with a short bias (to sell the currency).

Uses and benefits of currency strength meters for forex traders

Currency strength meters offer a range of benefits for forex traders, including:

  1. Simplified analysis: They consolidate data from multiple sources, providing traders with a clear and concise overview of currency performance. This simplification makes it easier for traders to analyse market conditions and identify trends.

  2. Improved decision-making: By highlighting the strength or weakness of individual currencies, CSMs enable traders to make more informed decisions about which currency pairs to trade. This can help to optimise returns and minimize risk.

  3. Enhanced risk management: CSMs can help traders identify high-risk currency pairs and avoid trading them, thereby reducing potential losses. By focusing on stronger currencies, traders can increase the likelihood of successful trades.

  4. Time-saving: Analyzing multiple currencies and economic indicators can be a time-consuming process. CSMs streamline this process, allowing traders to quickly assess the strength of different currencies and make better-informed decisions.

  5. Versatility: CSMs can be used alongside other trading tools and strategies, such as technical analysis or fundamental analysis. This flexibility allows traders to develop a well-rounded trading approach, combining the strengths of multiple tools and techniques.

In summary, currency strength meters are invaluable tools for forex traders, providing a wealth of information to help them make informed decisions and optimise their trading strategies. By offering a clear snapshot of currency performance, CSMs can simplify analysis, enhance decision-making, and improve risk management.

How to Read a Currency Strength Meter

In this section, we'll explore the basics of interpreting currency strength meters, helping you to make sense of the information they provide and use it effectively in your trading decisions.

Interpreting positive and negative scores

Currency strength meters often display currencies' strengths as positive or negative scores. Here's what these scores mean:

  • Positive score: A currency with a positive score is considered strong. This indicates that it is performing well against other currencies, either due to positive economic indicators or strong market sentiment. A higher positive score represents a stronger currency.

  • Negative score: A currency with a negative score is considered weak. This means that it is underperforming compared to other currencies, possibly due to negative economic indicators or weak market sentiment. A lower negative score represents a weaker currency.

When analysing currency strength meters, it's essential to understand that these scores are relative, meaning that a currency's strength or weakness is always in comparison to other currencies.

Understanding currency strength meter charts

Currency strength meter charts can take various forms, but they typically display each currency's strength as a bar or line, with colours or numerical values indicating the strength or weakness of the currency.

Here's a quick guide to understanding these charts:

Coloured bars: In many CSM charts, strong currencies are represented by blue or green bars, while weak currencies are represented by red bars. The length of the bar indicates the degree of strength or weakness, with longer bars representing stronger currencies and shorter bars representing weaker currencies.

Logikfx's live currency strength meter bar chart
Example of a coloured bars CSM chart

Numerical values: Some CSM charts display numerical values alongside the bars or lines, providing a more precise indication of a currency's strength or weakness. These values can range from -100 to +100 or -50 to +50, with positive numbers indicating strong currencies and negative numbers indicating weak currencies.

Example of USD, EUR and GBP  Macro Currency Strength Meter numerical scores
Example of numerical values CSM for USD, EUR and GBP

Trend indicators: In addition to the static representation of currency strength, some CSM charts also include trend indicators that show whether a currency is strengthening or weakening over time. These indicators may be displayed as arrows or icons, with upward-pointing arrows representing strengthening currencies and downward-pointing arrows representing weakening currencies.

Logikfx's technology summary dashboard for GBP USD as on 18 March 2023
Example of a trend indicator by Logikfx: Technology summary dashboard

To make the most of a currency strength meter, it's essential to understand how to read and interpret the information it provides. By mastering the basics of positive and negative scores, and familiarising yourself with different types of CSM charts, you'll be better equipped to make informed trading decisions and capitalise on opportunities in the forex market.

Fundamental vs Technical Currency Strength Meters

Comparison of free and premium currency strength meters

Free currency strength meters

  • Primarily use technical analysis

  • Calculate strength based on forex market exchange-rate price changes in real-time.

  • May lack accuracy and comprehensiveness