OPEN-SOURCE SCRIPT
FX Forecasting Model [TrendX_]
FX Forecasting Model indicator is a forecasting tool that takes advantages of macroeconomic analysis and market surveillance to predict Exchange rate movement.
*** Customize the macro data for home country (base currency) and foreign country
USAGE
This consists of 4 editable options align with 4 Forecasting Models
TrendX Model)
TrendX Model is a type of multiple linear regression, which is a statistical method that estimates the relationship between the currency exchange rate and various macroeconomic indicators.
*** Remember the 1st thing to do is to customize the macro data for home country (base currency) and foreign country, before take any further steps.
Purchasing Power Parity (PPP Model)
The PPP model is a conceptual model of currency exchange. The model illustrates how the exchange rate between two countries’ currencies is influenced by the variations in the prices of goods and services in those countries, which depend on the inflation rate. The activity of buying and selling goods and services internationally will shift the exchange rate to balance the prices in both countries.
Interest Rate Parity (IRP Model)
Interest Rate Parity (IRP) model is a theoretical model that relates the interest rates and the exchange rates of two countries. According to IRP, the difference between the forward and spot exchange rates of two currencies should be equal to the difference between their interest rates. IRP helps traders to determine the fair value of a currency pair and compare it with the market value. If the market value deviates from the fair value, then there is a potential for arbitrage or hedging.
Combined Forecast Model (Mixed Model)
Since each model has its own advantages, many people are interested in the concept of using a mix of forecasts to get better results than any single forecast. Mix Model is a method that uses different proportions of the forecasts from three models: TrendX, PPP and IRP models. The default proportion is 0.2 for TrendX, and 0.4 for both PPP and IRP. You can change these proportions according to your liking.
CONCLUSION
FX Forecasting Model Indicator is very practical for FOREX traders who wants to make informed and rational decisions based on Macroeconomic Analysis. It can help find arbitrage opportunity in currency exchange market. Accordingly, it can also be helpful for traders to use alongside other forms of Technical Analysis.
DISCLAIMER
The results achieved in the past are not all reliable sources of what will happen in the future. There are many factors and uncertainties that can affect the outcome of any endeavor, and no one can guarantee or predict with certainty what will occur.
Therefore, you should always exercise caution and judgment when making decisions based on past performance.
*** Customize the macro data for home country (base currency) and foreign country
USAGE
This consists of 4 editable options align with 4 Forecasting Models
TrendX Model)
TrendX Model is a type of multiple linear regression, which is a statistical method that estimates the relationship between the currency exchange rate and various macroeconomic indicators.
*** Remember the 1st thing to do is to customize the macro data for home country (base currency) and foreign country, before take any further steps.
Purchasing Power Parity (PPP Model)
The PPP model is a conceptual model of currency exchange. The model illustrates how the exchange rate between two countries’ currencies is influenced by the variations in the prices of goods and services in those countries, which depend on the inflation rate. The activity of buying and selling goods and services internationally will shift the exchange rate to balance the prices in both countries.
Interest Rate Parity (IRP Model)
Interest Rate Parity (IRP) model is a theoretical model that relates the interest rates and the exchange rates of two countries. According to IRP, the difference between the forward and spot exchange rates of two currencies should be equal to the difference between their interest rates. IRP helps traders to determine the fair value of a currency pair and compare it with the market value. If the market value deviates from the fair value, then there is a potential for arbitrage or hedging.
Combined Forecast Model (Mixed Model)
Since each model has its own advantages, many people are interested in the concept of using a mix of forecasts to get better results than any single forecast. Mix Model is a method that uses different proportions of the forecasts from three models: TrendX, PPP and IRP models. The default proportion is 0.2 for TrendX, and 0.4 for both PPP and IRP. You can change these proportions according to your liking.
CONCLUSION
FX Forecasting Model Indicator is very practical for FOREX traders who wants to make informed and rational decisions based on Macroeconomic Analysis. It can help find arbitrage opportunity in currency exchange market. Accordingly, it can also be helpful for traders to use alongside other forms of Technical Analysis.
DISCLAIMER
The results achieved in the past are not all reliable sources of what will happen in the future. There are many factors and uncertainties that can affect the outcome of any endeavor, and no one can guarantee or predict with certainty what will occur.
Therefore, you should always exercise caution and judgment when making decisions based on past performance.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.