Our BVQ Matrix uses Currency Matrix data. You must understand how our Currency Matrix works before learning how to use our BVQ Matrix. If you haven’t yet, please complete our Currency Matrix tutorial.
The Base and Quote
As we mentioned in our Currency Matrix tutorial, currencies on the Forex market are always traded in pairs. In order to find out the relative value of one currency, you need another currency to compare. When you buy one currency, you automatically sell another currency. Example: when we sell the EURUSD, we are selling the EUR and buying the USD at the same time. If we buy the EURUSD, we are buying the EUR and selling the USD at the same time.
Using the Base and Quote
Standard charting provides the price (value) for each Forex pair. Our Currency Matrix separates pairs into their Base and Quote components. We can use this data to determine which side of the currency is driving a price move and if that side is over-extended (but we’ll get to that later). For now, let’s just focus on the relationship between the Base and Quote so we can understand how they affect each other. Please scroll through the images below (6 in total).
BVQ Matrix vs Currency Matrix
The Currency Matrix calculates data for individual currencies in 5 time frames. The BVQ Matrix calculates a weighted average for all 5 Currency Matrix time frames and displays the averaged data for 17 currency pairs. We refer to these averages as “Base Composite” value and “Quote Composite” value. The BVQ Matrix also displays an average of the Base Composite and Quote Composite, as well as, a Global Trend Value for all 17 currency pairs.
The Currency Matrix allows you to drill down to single time frames and get more details.
The BVQ Matrix displays an average of the Currency Matrix data per currency pair for faster analysis.
Using the BVQ Matrix
Our BVQ Matrix displays Base and Quote composite data, an average of the Base and Quote composites and Global Trend Data. Let’s break down each one:
- Base Value – This is an average of all 5 Currency Matrix time frames.
- Quote Value – This is an average of all 5 Currency Matrix time frames
- Base & Quote Average – This is an average of the Base Value and the Quote Value.
- Global Trend Value – This is an averaged composite value of several technical indicators.
The Global Trend Value is a composite average of our trading tool data + several technical indicators. It would take more than 20 live charts per currency pair to replicate the data. It’s very accurate!
The Quote Value is Inverted
We invert the Quote value to make the user experience more intuitive. As explained in the Currency Matrix tutorial, when the Base Value increases, the relative currency pair price also increases. When the Base Value decreases, the relative value also decreases. However, when the Quote Value increases, the relative currency pair value “decreases”. Also, when the Quote Value decreases, the relative currency pair value “increases”.
The counter-intuitive relationship between the Quote Values and currency pair price action can be confusing when the data is organized by currency pair. So we inverted the Quote Values. Example: if the Quote Value is showing a negative value on the BVQ Dashboard, this means the value is actually positive on the Currency Matrix, and since a positive value will send a currency pair short/down, we display the value as negative on the dashboard. Similarly, if the Quote Value is showing a positive value on the BVQ Dashboard, this means the value is actually negative on the Currency Matrix, and since a positive value will send a currency pair long/up, we display the value as positive on the dashboard.
See the images below for a visual example of how this works:
Better Matrix Trade Signals
A very simple and powerful way to increase your profits with our Matrix Trade Signals is by only taking trades in the direction of the Base & Quote Average direction. When the Base & Quote Average and Global Trend Value are mixed (showing opposite trend information – this indicates a longer term consolidation or trend reversal), follow all of the signals sent.
NOTE: we plan to add this feature to our Matrix Trade Signals in the future.