How To Use Your Live Forex Trading Heat Map:
As a rule, when looking up a currency cross you should start reading your Heat Map from the Y Axis (vertical ) on the left.
Think of it as the Y Axis listing your BASE currencies and the X Axis listing your QUOTE currencies. So with USD/JPY the USD would be the BASE and JPY would be the QUOTE currency.
Example 1: Let’s say that today we wish to see what the AUD/JPY cross is up to. As pictured below we would start on the left (Y) and look down to the AUD row. We would then follow this across the X axis to the JPY column where we can see the box is red. Therefore the AUD is down, in this case -0.78% against the JPY. We would follow this process to find all the XXX/JPY crosses.
Example 2: If we wanted to see how the JPY is doing generally against it’s G8 counterparties we would again start from the Y Axis and simply read across the entire row (X axis) from left to right. In the picture below we can clearly see that the all the reference boxes are green and therefore the JPY is up against all of it’s G8 counterparties. This process works no matter which base currency we are looking up, so now take a look at the USD row where we can clearly see that the USD is stronger than all but one of it’s counterparties, that being the JPY.
Example 3: We can use this Heat Map to see both sides the relative strength / weakness of any currency pairing. Let’s say we are interested in the AUD/USD. By starting on the left (Y Axis), selecting the AUD row and following that all the way to the end we can see that in this instance the AUD is down -0.46% against the USD. Conversely, by again starting on the Y Axis this time finding the USD row and following that across to the AUD column we can see that the USD is up against the AUD. Again, this works on all pairings.
I’ll be honest, I got lucky with the example above; I just happened to take the screen shot on a day when the JPY was very strong against all of it’s counterparties and the USD strong against most, which gave me a perfect opportunity to show you how this Heat Map can quickly give you an overall snapshot of the state of the market.
Being a trend-based swing-trader I know that when I pull up this page and I see such a map I am very unlikely to open any JPY shorts or trade against the USD that day !
TIP: If you trade Forex I would strongly advise you to open this page first thing and keep it open all the time, referring to if often throughout the day to be sure to keep abreast of the whole market.