System I - EXODUS
Right, let’s begin by explaining my system first;
Theory
Primary;
- EUR | USD.
- GBP | USD.
Secondary;
- EUR | GBP.
- USD | JPY.
- GBP | JPY.
Indexes;
- DXY.
- VIX.
My primary pairs are dollar related, the euro, and the pound sterling;
Reasoning for that is the euro, eurozone, is the second largest economy. Time zone news related makes it very easy to follow, and I’m surrounded within EU environment and traders. The reason I added GBPUSD to the loop is for the same reason, but due to Brexit there is an extra dynamic towards it, news related volatility and easy to follow releases within my time zone.
Secondary pairs are quite simple as well;
EG (EUR GBP) is the first secondary, which helps me determine whether EU or GU will be leading in terms of direction. Then I have UJ and GJ.
You might be wondering why I don't have EURJPY?
Purely because of fundamental relationships between JPY and EU. So, for my safe-haven crosses I like a little bit more illiquid correlation, which is GJ. And a good inverse correlation between the dollar and JPY
For the Indexes;
I have my dollar basket which is leading for our understanding of the dollar. I then have the VIX, volatility index, which goes through to understand cyclical movements.