Creating Synthetic SSI for Cross Currencies

Talking Points:

  • SSI informs us exactly the proportion of long retail traders into local retail traders to get pairs that are significant.
  • Some cross currency pairs, just like the NZDJPY, are made from the SSI database.
  • We could unite major SSI worth together to produce artificial SSI for all these pairs.

The Speculative Sentiment Index is undoubtedly the Best Forex trading instrument. 1 problem though, is the data isn’t released for most cross-border which traders trade, just like the EURAUD, NZDJPY, CHFJPY, etc.. Within the following guide, I describe how artificial SSI values might be generated for these kinds of pairs.

Summary of SSI

SSI provides us a contrast involving the number of retail Forex traders Are long and brief onto every Significant pair. You wish to trade contrary to this Forex trading audience significance it’s really a”contrarian” indicator. The notion is that almost all retail traders drop money, therefore that there might possibly be a eye-opening advantage in evaporating them placing the exact alternative trade.

We could easily see from the image below a photo of everything the SSI resembles, upgraded twice every day at no cost to members of Blueforexinstitute Plus. Each one the main pairs have been represented in addition to some CFD services and products for traders beyond the United States.

Learn Forex: Blueforexinstitute Plus’ Speculative Sentiment Index (SSI)

(Source: Blueforexinstitute’s SSI)

But what about some of the other currency pairs that are not listed? How do we know what the sentiment is on those pairs? This is where SSI becomes”artificial”

Steps to Creating Synthetic SSI

This sounds complicated the first time around, but makes sense over time. I am going to start with an explanation of how this works with the following formula. I will then go through 3 examples to put it into practice.

Did you get that? Probably not, which is ok. It took me awhile before I could wrap my head around it. Let’s take a look at 3 examples using the formula above.

Example #1 – EURAUD

This is the simplest example of the group. Both currencies are the first currency in their USD pairs, so each adopt their SSI signs. Because the signs are opposite of each other, we multiply the two SSI’s together. The SSI for EURAUD is negative because the EUR has a negative SSI and it leads the pair.

Example #2 – NZDJPY

This example is a little trickier. The NZD is first in its pair so it adopts its positive SSI, but because the JPY is the 2nd currency in its pair with the USD, it adopts the opposite SSI sign, negative. The NZD and JPY SSI have opposite signs so we multiply them together. The SSI for the NZD/JPY is positive because the NZD has a positive SSI and it leads the pair.

Example #3 – CHFJPY

This example is the most difficult. Both the CHF and the JPY are the 2nd currency when paired up with the USD, this means they each adopt the opposite sign. Because both the CHF and JPY are the same sign, we must divide the larger SSI (1.85) by the smaller SSI (1.22). The SSI for CHF/JPY is positive because the CHF had the smaller SSI of the two currencies so we must adopt the opposite sign.

Synthetic Sentiment Opening the Door

This advanced technique opens the door to sentiment trading on a large amount of pairs not otherwise available and can take your trading to next level. Rather than looking at only trading currencies against the USD, we can now pair together strong and weak sentiment currencies with each other for a sentiment trade stronger than their USD-pair counterparts. To test out your SSI based trades, be sure to sign up for Free Forex Demo account.

Good trading!

–Written by Rob Pasche

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