⚙️ TCI+ Forex Trading System

Developed by TradingCenter.org and Giorgos Protonotarios, TCI+ is a multi-currency trading analysis system.

A New Era in Forex Technical Analysis

The TradingCenter community is already familiar with the TCI technical analysis system. TCI is designed to highlight short-term price exaggerations in global financial markets. Using a complex algorithm that tracks unusual price movements, TCI generates trading signals for all major financial markets (Forex, Commodities, Stocks, and Indices).

But how can exaggerated price movements be spotted?

Aren’t financial markets efficient enough to correct these exaggerations through arbitrage? The answer is no. That’s because real-world market changes are often too complex to be processed instantly by arbitrage. As a result, new developments are not fully or immediately reflected in market prices. It may take days or even weeks for these changes to be properly assessed and priced in. That’s why we use TCI technical analysis. In general, technical analysis helps identify overbought or oversold conditions and forecast likely price corrections.

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Financial Markets Often Overreact – TCI Aims to Detect It

So what exactly can technical analysis predict? It can forecast changes in the demand and supply of a financial asset. In the short term, when no major news is released, demand and supply are mainly driven by two equally important factors:

1. Market Participant Psychology

2. Global Arbitrage Activity

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Entry/Exit Levels & Targeted Timeframe

A basic technical analysis system can usually identify:

i) Overbought and oversold price levels of a financial asset

More advanced systems analyze changes in supply and demand, allowing them to also identify:

ii) Optimal entry and exit points

What sets the TCI technical system apart is its ability to also forecast the likely timing of price movements:

iii) Entry and exit timeframe

This makes trading more precise in terms of timing—and therefore more effective.

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The new TCI+ System for Forex Trading

TCI: A System Designed for Forecasting Market Fluctuations

TCI was developed over the past decade to forecast future price movements in Stocks and Indices. Later, it was adapted for the Forex market, and the first Forex trading signals have already been published on TradingCenter.

TCI has been re-engineered to fully match the specific conditions of the currency market. The new version, called TCI+, is based on a multi-currency analysis framework explained below.

TCI+ Analyzes Multiple Forex Pairs in a Single Price Model

Since currencies are always traded in pairs, TCI+ is built to track the trading activity of several different Forex pairs—not just one—and combine them into a single technical analysis model.

TCI+ Example Using the Euro

To show the difference between TCI and TCI+, consider this example:

• TCI can analyze the EUR/USD pair on its own.
• TCI+, on the other hand, analyzes EUR/USD, EUR/GBP, EUR/JPY, and EUR/CHF all together.

How? By calculating the TCI values for each pair and combining them into one:

🧮 TCI+ = Σ ( TCI )

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A More Advanced TCI+ System

We’ve taken it a step further by assigning different weights to each Forex pair based on their trading volume in the market. The table below shows the trading volume and the corresponding weight used in our TCI+ model for the Euro.

Table: Forex Currencies % Turnover Activity & TCI Weight

FOREX CURRENCY	% FOREX ACTIVITY	TCI+ WEIGHT (%)
USD	85.0%	68.83%
JPY	19.0%	15.38%
GBP	13.0%	10.53%
CHF	6.5%	5.26%
		100%

This is the formula:

🧮 EUR(TCI+) = {(EUR/USD x 0.6883) + (EUR/JPY x 0.1538) + (EUR/GBP x 0.1053) + (EUR/CHF x 0.0526)} = 100%

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TCI+ Produces More Balanced Forecasts Under Current Market Conditions

The forecasting results of TCI+ are more balanced and reliable under current Forex market conditions compared to individual TCI results.

For future Forex trading signals published on TradingCenter.org, both TCI and TCI+ results will be considered.

Chart: 4 Individual TCI Charts

Euro TCI+ Chart Based on 4 Forex Pairs (Jan 1999 – Mar 2013)

This is the first TCI+ chart for the Euro, based on data from four Forex pairs covering the period from January 1999 to March 2013.

Chart: TCI+ on Euro Currency and EURUSD (1999–2013)

 

  

■ Giorgos Protonotarios, Financial Analyst

TCI+ Forex Technical Analysis System, for TradingCenter.org (c)