A1 Trading Company

EdgeFinder Scoring

Deep dive into how the edgefinder scores data
Total Scoring
COT
Retail Sentiment 
Seasonality
GDP Growth
CPI (Inflation)
Employment Change
Unemployment Rate
Interest Rates
PMI
Retail Sales
Risk on / risk off Gauge
Price Forecast
Carry Trade Scanner
Historical Backtest
Smart Alerts

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Total Scoring

HOW IS THE TOTAL SCORE CALCULATED?
​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -18 to +18.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.

COT

How is the cot data calculated?
The non-commercial commitment of traders data is an excellent way for traders to track what large speculators in the market are buying or selling. The EdgeFinder assigns a more bullish reading to assets that large speculators taking a bullish position in, and a more bearish reading to assets that large speculators are taking a bearish position in.
Logic for currency pairs:
The EdgeFinder's score for COT data in regards to currency pairs considers the latest institutional buying or selling that took place in each respective currency, according to the latest report.

First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning.

To get this value, the EdgeFinder finds the difference between the currencies previous week's net long % and the currencies latest net long %. (Long% current - Long% Previous)

The easiest way to demonstrate this is through an example. Let's assume we are looking at 'EURUSD'. For our example, 'EUR' is currency A, and 'USD' is currency B.

First, we will consider currency A. If the EdgeFinder detects a positive value in week over week % change for currency A, the COT score for the currency pair is increased by +1. If weekly % change is negative, the COT score for the currency pair is decreased by 1 (-1).

Then, we consider currency B, the EdgeFinder repeats this process, but inverts the score impact due to this being the counter to the base currency (currency A). So, if the EdgeFinder detects a positive value in week over week change for currency B, the COT score for the currency pair is decreased by 1 (-1). If it is negative, the COT score for the currency pair is increased by +1.
Logic for indices, commodities, crypto and metals :
For scoring non currency pairs, the EdgeFinder considers the latest COT reported change in institutional buying/selling, as well as the overall net average positioning for each asset.

Let's do an example to showcase how this calculation works. For our example, let's say we are considering the EdgeFinder's COT score on gold.

Part 1: latest change in buying/selling
First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning.

To get this value, the EdgeFinder finds the difference between the asset's previous week's net long % and the asset's latest net long %. (Long% current - Long% Previous)

If the weekly % change is a positive value, that indicates that on a net basis, the EdgeFinder detects institutional bullishness. If this weekly % change is a negative value, that would suggest bearishness.

If the net weekly % change is positive, the EdgeFinder increases the asset's COT data score by +1. If negative, it decreases the asset's COT data score by 1 (-1).

Part 2: Net positioning
The net position column within the EdgeFinder's COT data page showcases the current total (long-short contracts) positions overall in a particular asset.

If the net position calculation is positive, long positions outweigh short positions, and we would say net positioning is bullish. If this number is negative, short positions outweigh long positions, and we would say net positioning is bearish.

If net positioning is bullish, the asset's COT score is increased by +1. If net positioning is bearish, the asset's COT score is decreased by 1 (-1).

Part 3: Summation!
Finally, the EdgeFinder takes the summed up total of part 1 and part 2 to create a final COT score, that will range from -2 to +2. This is then factored in to the EdgeFinder's total output score automatically.
COT Net % Change Calculation:
To calculate the net % change value,

First, the EdgeFinder calculates the current percentage of long contracts relative to total open contracts. We call this the current long % value.

The calculation for current long % value is as follows:
(current # long contracts / (current # long + current # short contracts))

Then, the EdgeFinder calculates the previous week's long % value.

The calculation for previous week's long % value is as follows:
(previous week's # long contracts / (previous week's # long contracts + previous week's # short contracts))

Finally, to calculate the net % change value, the calculation is:
(current week's long % - previous week's long %)

Example:
If last week the net long % was 55%, and the current week is 57%, that would result in a net % change of 2%. By using the net long %, we account for the change in both long and short contracts week over week.

Scoring Help

Learn more about the EdgeFinder's Scoring

What do the scores mean?

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -10 to +10.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.
Click here to learn more.

Retail Sentiment

How is the retail sentiment scored?
Retail sentiment is the measurement of the overall long/short positions on a pair, commodity or index. Historically, the crowd is rarely correct picking direction. They will usually try to trade a reversal or catch a big swing against strong trends. Although this type of trading can work, it is not often that they are accurate. Sometimes, retail is too early, too late, and even flat out wrong. With that said, the EdgeFinder uses an inverse score to which way the crowd is trading.

The EdgeFinder considers retail positioning a contrarian signal if positioning is above 60% long, or below 40% short. Meaning; if retail positioning is greater or equal to 60% long, the EdgeFinder will produce a -1 score for retail positioning. If retail positioning is below or equal to 40% short, the EdgeFinder will produce a +1 score for retail positioning.


If retail traders are 60% long (or more), then this is a bearish signal (-1). If retail traders are 40% long (or less), then this is a bullish signal (+1).
So the overall, score for retail can only go from -1 to +1.
In this example of CHFJPY, retail is 13% long and 87% short. Since the crowd is under 40% long (60% short), the score will end up being a +1.

Seasonality

description
The Seasonality Tracker averages the last 5 (red line) and 10 years (blue line) of price performance and plots these averages on a bar chart. You will be able to see how price has performed historically each month. Also, each bar is a weekly average for the last 10 years (default setting). You can change the time period to reflect the average of however many years in the drop down menu where it says “Year”.
Functionality
Traders can use this to help make directional decisions on each asset with this tool. For example, if the price of EURUSD tends to fall by 1% in March for the past 5 and 10 years, the likelihood of that happening again is probable.
What We Need:
Daily price changes in % from January 1st - December 31st
Weekly price changes in % from January 1st - December 31st
Average monthly return for the past 5 and 10 years
Average weekly return for the past 5 and 10 years
MoM Seasonality
Average % price change for each month in the last 10 years
Plot them on a bar chart for 12 months of the year.
Scoring Method:
If 10 year > 5 year > 0, +2
If 5 year > 10 year > 0, +1
If 10 year < 5 year < 0, -2
If 5 year < 10 year < 0, -1
If 10 year < 0 AND 5 year > 0, 0
If 5 year < 0 AND 10 year > 0, 0

GDP Growth

Concept
Concept: The GDP growth scanner offers a visual representation of GDP growth among major economies globally.
A higher GDP growth reflects a stronger and more robust economy, while a lower GDP growth reflects a weaker economy.
The statistics shown are the most recent data pulled in by our software.
GDP Score Calculation:
The EdgeFinder considers the actual GDP value relative to the forecasted value. If the value is higher than expected, this is considered bullish for currency & stock market (+1), bearish for gold (-1), bullish for commodities and crypto (+1). If negative growth, all signals are reversed. For non currencies, the score range for GDP is -1 to +1.

For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

CPI (Inflation)

Concept:
Consumer Price Index (CPI) and Core CPI are primary measures of inflation central banks use to make monetary policy decisions. Rising or falling Inflation impacts some assets differently than others. The EdgeFinder is calibrated to reflect how traditional economic theory would suggest an asset may be impacted by the latest figures.

Consumer Price Index (CPI) is the metric we use to measure the rising or falling inflation for each major economy. The EdgeFinder imports and compares the latest data relative to forecasts & previous data in order to generate its scoring.
Change:
Recent change in CPI will affect score in a certain type of way depending on the asset. For instance, a rise in CPI would be a bearish indicator for the indices because it might influence the Fed to raise interest rates. However, seeing this same sort of news would be bullish for the dollar, since higher interest rates usually lead to a stronger USD.
Location:
Not only does the change in inflation matter, but also what the nominal inflation rate is currently. For example, CPI readings being above 3% is traditionally considered a high inflation environment, while CPI readings being below 2% are considered low inflation environments. This "environment" or location is also considered in our scoring.

Inflation Score Calculation for Currency Pairs:

For currency pairs, we consider the latest reported CPI reading relative to what analyst forecasts were prior to the reported figure.

Because a currency pair involves two unique economies, the software analyzes each currency individually, and computes a total score for the pairing.

For example, for EURUSD, we consider both the Euro, and the US dollar when scoring this pair's inflation reading.

For the equation below, currency A would refer to 'EUR', while currency B would refer to 'USD'.

Calculation:
If currency A's latest CPI is HIGHER than forecasted, +1
If currency A's latest CPI is LOWER than forecasted, -1
If currency A's latest CPI is EQUAL to forecasts, +0

We repeat for currency B, but invert the impact on the currency pair
If currency B's latest CPI is HIGHER than forecasted, -1
If currency B's latest CPI is LOWER than forecasted, +1
If currency B's latest CPI is EQUAL to forecasts, +0

Inflation Calculation for Gold

For gold, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest US CPI is HIGHER than forecasted, -1
If latest US CPI is LOWER than forecasted, +1
If latest US CPI is EQUAL to forecasts, +0

If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, -1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, +1
If 1% <= latest US CPI >3%, 0
If latest US CPI > 3%, +1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder considers a high inflation environment to be bullish for gold as a baseline. However, if inflation is ticking up in the most recent data alongside strong economic output data, it could suggest that the US central bank may act to take a restrictive monetary policy stance. Strong economic data accompanied with elevated inflation can be bullish for the dollar, and headwind to gold. Specific to the inflation calculation, the EdgeFinder assumes gold to be most bullish when inflation is hot but cooling, or during severe recessionary periods. The EdgeFinder considers gold to be most bearish when inflation is under control.

Calculation for Indices & BTCUSD

For indices & BTC, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. Similar to gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

(US indices only)
If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, +1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest CPI <= 3%, +1
If latest CPI > 3%, -1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder typically views inflation to be the least threatening to these risk on assets when it is tamed and under control. Whenever inflation becomes too high or too low, it is considered by the EdgeFinder to be a potential bearish catalyst. If inflation is too high, monetary policy could become more restrictive and harmful to businesses. On the other end of things, if inflation enters a dangerously low level, it suggests that the economy is quite weak and could hurt corporate earnings and risk sentiment.

Calculation for Commodities (US Oil, Silver, Copper, Platinum)

For commodities, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, -1
If latest US CPI >= 1%, +1

The EdgeFinder assumes that higher inflation is considered a more bullish environment for commodities. This is because higher inflation means rising prices, and is often accompanied with higher demand for raw materials due to strong economic output. If however economic output data is found to be weak, that will be accounted for in the EdgeFinder's total score, and may act to counterbalance this inflation reading.

Employment Change

Employment change
Under Maintenance

Unemployment Rate

Unemployment Rate
Under maintenance

Interest Rates

Scoring concept:
The interest rate breakdown is designed to measure changes in the 2-year yield in the US and forecasts from central banks.
1:
Take the 7 day moving average of the US02Y (2-year treasury yield)
For Indices, XAUUSD, USOil, BTCUSD
If price is above the moving average, -1
If price is below the moving average, +1
In this example, the interest rate forecast for the GBP is unchanged. This means that UK100 will receive a 0 score for interest rate.

If the forecast happened to be higher than current rates, UK100 would get a -1. And if the forecast was below current rates, the index would receive a +1.
Scoring Interest Rates for Currency Pairs
Concept: Uses current and next quarter’s forecasted interest rate for both currencies (Data from the Central Bank Forecast Page)

Currency A
If forecast > current, +1
If forecast < current, -1
If forecast = current, 0
Currency B
If forecast > current, -1
If forecast < current, +1
If forecast = current, 0
In this case, the forecast rate is higher than the current rate. So the NZD would get a +1 score.

PMI

PMI
The EdgeFinder considers the change from previous data to latest data in mPMI & sPMI. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.
EdgeFinder Top Setups

Video Tutorials

How to use the top setups page

Retail Sales

Retail Sales
The EdgeFinder considers the change from previous data to latest data in retail sales. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.
EdgeFinder Top Setups

Video Tutorials

How to use the top setups page

Risk on / Risk off Gauge

Description:
The Risk Gauge Meter combines the price action of various risk-on/off assets and measures risk sentiment of the overall market. The score goes from -6 (strong risk-off reading) to +6 (strong risk-on reading).


The assets used are a combination of indices, commodities, and 10-year bond yields (VIX, SPX500, Gold, US10Y, DXY, JXY).
This metric is good for indicating which assets are going to be bullish or bearish. For example, if the risk meter is at -4, it suggests that USD, CHF and JPY could be bullish. If the risk meter is at +4, it suggests that AUD, CAD, NZD, GBP, EUR, XAUUSD, SPX500, could be bullish.
In this current example of the Risk Gauge Meter, monthly performance of risk-off assets is positive, the weekly performance is mixed, and the daily performance is risk-on.

If following days are also risk-on, this could be an indication of a shift in sentiment from risk-off to risk-on.

The bias output is scored this way:
-2 to +2 = neutral
-3 to -4 /+3 to +4 = “risk-off”/”risk-on”
-5 to -6 / +5 to +6 = “heavy risk-off/ heavy risk-on”

Price Forecast

Price Forecast
The price forecast feature displays short-term projections for each asset, based on the trend reading metric, and standard deviation. Please note, these are general projections and may adjust as time passes or trends change.

To define trend reading, we use the daily chart and 3 exponential moving averages: the 5-day EMA, 8-day EMA, and 21-day EMA
W = 5 day EMA
X = 8 day EMA
Y = 21 day EMA
Here is our calculation for the trend, in the backend:
=if(and(W2>X2,X2>Y2),2,
if(and(W2<=X2,X2>Y2),1,
if(and(W2=X2,X2=X2,X2
The example above is a price forecast chart of USDJPY. The price is clearly in an uptrend for the last 3 weeks. Because the 5-day exponential moving average is above the 8-day, and the 8-day is above the 21-day, we would give this asset a +2 score on the trend reading.

Carry Trade Scanner

Want to collect swaps on the daily? The Carry Trade Scanner is a helpful tool to show you which pairs are the best ones to hold on to for positive swaps.

What is a Carry Trade? A carry trade is the process of borrowing an asset with a low-interest rate and reinvesting it into another currency with a higher interest rate. In other words, the currency you own is swapped for another by an institution. If the said pair you own yields a positive rate if you buy, then you will get paid when it’s swapped. On the other hand, if the pair yields a negative swap rate, you would need to short it to get paid at swap.

How it works: The table shows several different currency pairs. In order to calculate the swap rate, it takes the base currency rate minus the quote currency rate to get the interest rate divergence. The positive carry direction tells you which direction you would have to trade in order to collect a positive swap. For instance, if the base minus quote is positive, you would need to buy in order to get paid interest. If the difference between base and quote is negative, you would need to short in order to get paid interest.
Functionality: This metric is good for finding which pairs will pay positive swap rates. If you’re looking to take a carry trade, this table will show you which pairs to long or short in order to collect a swap. So why would traders want to see this? Some traders may look to avoid paying swaps so they’ll make sure they don’t hold a pair through the swap. Others might just want to collect interest through the carry trade regardless of price action because of their tolerance to potential lower moves.
Example:
For example, the table above shows a list of currencies. If you were to buy and hold USDJPY through the swap, you would collect interest. However, if you were to short and hold USDJPY through the swap, you would pay interest. The pairs marked in blue will tell you which pairs you should buy to collect a positive swap, and the pairs in red show you which to short if you want to collect a swap.

The dollar carries a 5.5% interest, while the quote currency, JPY carries a negative interest rate. To calculate the approximate interest you would earn on each swap, we simply take the difference of the base rate minus the quote rate. In this case, We will subtract -0.10% from 5.50%. It will look something like this:

[(5.5 - (-0.10)] = 5.60%

This means you will collect around 5.6% for holding this pair to the long side during each swap.

Economic Calendar

Concept:
The Historical Backtest section will show a 30-day look-back period on the EdgeFinder, showing the recorded scores each day for the selected asset. This feature is designed to show traders the change in EdgeFinder sentiment and price moves over time. This will help traders know when sentiment might be starting to switch from one bias to the other.
Functionality:
When a trader sees an asset's score become weaker to the long or short side over time, it could suggest that sentiment is going to flip.

Video Tutorials

How to use historical backtests

Example:
Here is an example on the SPX500. As you can see, price was moving higher at the same time the EdgeFinder's sentiment was at a strong bullish reading of +7. However, as price begain to show sings of bullish weakness, the scanner downgraded its score from a +7 to a +6. And eventually, the score reached as low as -3.

The EdgeFinder has the ability to adapt to market conditions based off a series of fundamental and technical data. The first sign of weakness in score led to over two weeks of selling on this index.

Smart Alerts

*Purchased Separately 
Very Bullish Alert
Conditions: If the score changes to a 6 or higher from a score of 5 or lower, Very Bullish Alert
Frequency: Update times hourly

Very Bearish Alert
Conditions: If the score changes to a -6 or lower from a score of -5 or higher, Very Bearish Alert
Frequency: Update times hourly

COT Bullish Alert
Conditions: If an asset’s Net Change is 2% or more on the Smart Money Tracker Page, Smart Money Went Long. If an asset’s Net Change is -2% or less on the Smart Money Tracker Page, Smart Money Went Short.
Frequency: Update times hourly

COT Bearish Alert
Conditions: If an asset’s text title is highlighted in red on the Smart Money Tracker Page, Smart Money Went Short Alert
Frequency: Update times hourly

New Edge Alert (Bullish)
Conditions: If an asset’s score changes from a <=2 to a >=3, New Edge Alert
Frequency: Update times hourly

New Edge Alert (Bearish)
Conditions: If an asset’s score changes from a >=-2 to a <=-3, Turned Bearish Alert
Frequency: Update times hourly

Discord Formatting Example
1)
:warning: New Strong Bias Alerts!:muscle:
Strong Bullish:chart_with_upwards_trend:
[pair]
[pair]
[pair]
Strong Bearish:chart_with_downwards_trend:
[pair]
[pair]
[pair]
_______________________________________________________________________
:warning: Latest Score Flips!:repeat:
**Bull to Bear**:ox: :arrow_right: :bear:
[pair]
[pair]
[pair]
**Bear to Bull**:bear: :arrow_right::ox:
[pair]
[pair]
[pair]

2)
:warning:New Smart Money Positions!:bar_chart:
**Net Short Bias**:small_red_triangle_down:
[pair]
[pair]
[pair]
**Net Long Bias**:small_red_triangle:
[pair]
[pair]
[pair]

Video Tutorials

How to use historical backtests

Scoring Breakdown

Total Scoring

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -18 to +18.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.

COT

COT Scoring Breakdown

The non-commercial commitment of traders data is an excellent way for traders to track what large speculators in the market are buying or selling. The EdgeFinder assigns a more bullish reading to assets that large speculators taking a bullish position in, and a more bearish reading to assets that large speculators are taking a bearish position in.

Logic for currency pairs:
The EdgeFinder's score for COT data in regards to currency pairs considers the latest institutional buying or selling that took place in each respective currency, according to the latest report. 

First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning. 

To get this value, the EdgeFinder finds the difference between the currencies previous week's net long % and the currencies latest net long %. (Long% current - Long% Previous)

The easiest way to demonstrate this is through an example. Let's assume we are looking at 'EURUSD'. For our example, 'EUR' is currency A, and 'USD' is currency B. 

First, we will consider currency A. If the EdgeFinder detects a positive value in week over week % change for currency A, the COT score for the currency pair is increased by +1. If weekly % change is negative, the COT score for the currency pair is decreased by 1 (-1). 

Then, we consider currency B, the EdgeFinder repeats this process, but inverts the score impact due to this being the counter to the base currency (currency A). So, if the EdgeFinder detects a positive value in week over week change for currency B, the COT score for the currency pair is decreased by 1 (-1). If it is negative, the COT score for the currency pair is increased by +1.



Logic for indices, commodities, crypto and metals :
For scoring non currency pairs, the EdgeFinder considers the latest COT reported change in institutional buying/selling, as well as the overall net average positioning for each asset. 

Let's do an example to showcase how this calculation works. For our example, let's say we are considering the EdgeFinder's COT score on gold.

Part 1: latest change in buying/selling
First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning. 

To get this value, the EdgeFinder finds the difference between the asset's previous week's net long % and the asset's latest net long %. (Long% current - Long% Previous)

If the weekly % change is a positive value, that indicates that on a net basis, the EdgeFinder detects institutional bullishness. If this weekly % change is a negative value, that would suggest bearishness. 

If the net weekly % change is positive, the EdgeFinder increases the asset's COT data score by +1. If negative, it decreases the asset's COT data score by 1 (-1).

Part 2: Net positioning
The net position column within the EdgeFinder's COT data page showcases the current total (long-short contracts) positions overall in a particular asset. 

If the net position calculation is positive, long positions outweigh short positions, and we would say net positioning is bullish. If this number is negative, short positions outweigh long positions, and we would say net positioning is bearish.

If net positioning is bullish, the asset's COT score is increased by +1. If net positioning is bearish, the asset's COT score is decreased by 1 (-1). 

Part 3: Summation!
Finally, the EdgeFinder takes the summed up total of part 1 and part 2 to create a final COT score, that will range from -2 to +2. This is then factored in to the EdgeFinder's total output score automatically.


Retail Sentiment

Retail Sentiment Scoring Breakdown

Retail sentiment is the measurement of the overall long/short positions on a pair, commodity or index. Historically, the crowd is rarely correct picking direction. They will usually try to trade a reversal or catch a big swing against strong trends. Although this type of trading can work, it is not often that they are accurate. Sometimes, retail is too early, too late, and even flat out wrong. With that said, the EdgeFinder uses an inverse score to which way the crowd is trading.

The EdgeFinder considers retail positioning a contrarian signal if positioning is above 60% long, or below 40% short. Meaning; if retail positioning is greater or equal to 60% long, the EdgeFinder will produce a -1 score for retail positioning. If retail positioning is below or equal to 40% short, the EdgeFinder will produce a +1 score for retail positioning.


If retail traders are 60% long (or more), then this is a bearish signal (-1). If retail traders are 40% long (or less), then this is a bullish signal (+1).
So the overall, score for retail can only go from -1 to +1.

Seasonality

Seasonality Scoring Breakdown

Description: The Seasonality Tracker averages the last 5 (red line) and 10 years (blue line) of price performance and plots these averages on a bar chart. You will be able to see how price has performed historically each month. Also, each bar is a weekly average for the last 10 years (default setting). You can change the time period to reflect the average of however many years in the drop down menu where it says “Year”.

Functionality: Traders can use this to help make directional decisions on each asset with this tool. For example, if the price of EURUSD tends to fall by 1% in March for the past 5 and 10 years, the likelihood of that happening again is probable.
What We Need:
Daily price changes in % from January 1st - December 31st
Weekly price changes in % from January 1st - December 31st
Average monthly return for the past 5 and 10 years
Average weekly return for the past 5 and 10 years
MoM Seasonality
Average % price change for each month in the last 10 years
Plot them on a bar chart for 12 months of the year.
Scoring Method:
If 10 year > 5 year > 0, +2
If 5 year > 10 year > 0, +1
If 10 year < 5 year < 0, -2
If 5 year < 10 year < 0, -1
If 10 year < 0 AND 5 year > 0, 0
If 5 year < 0 AND 10 year > 0, 0

GDP Growth

GDP Growth Scoring Breakdown

Concept: The GDP growth scanner offers a visual representation of GDP growth among major economies globally.
A higher GDP growth reflects a stronger and more robust economy, while a lower GDP growth reflects a weaker economy.
The statistics shown are the most recent data pulled in by our software.

GDP Score Calculation:
The EdgeFinder considers the actual GDP value relative to the forecasted value. If the value is higher than expected, this is considered bullish for currency & stock market (+1), bearish for gold (-1), bullish for commodities and crypto (+1). If negative growth, all signals are reversed. For non currencies, the score range for GDP is -1 to +1.

For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

CPI (Inflation)

Inflation Scoring Breakdown

Concept: Consumer Price Index (CPI) and Core CPI are primary measures of inflation central banks use to make monetary policy decisions. Rising or falling Inflation impacts some assets differently than others. The EdgeFinder is calibrated to reflect how traditional economic theory would suggest an asset may be impacted by the latest figures. 

Consumer Price Index (CPI) is the metric we use to measure the rising or falling inflation for each major economy. The EdgeFinder imports and compares the latest data relative to forecasts & previous data in order to generate its scoring.

Change: Recent change in CPI will affect score in a certain type of way depending on the asset. For instance, a rise in CPI would be a bearish indicator for the indices because it might influence the Fed to raise interest rates. However, seeing this same sort of news would be bullish for the dollar, since higher interest rates usually lead to a stronger USD.

Location: Not only does the change in inflation matter, but also what the nominal inflation rate is currently. For example, CPI readings being above 3% is traditionally considered a high inflation environment, while CPI readings being below 2% are considered low inflation environments. This "environment" or location is also considered in our scoring.
Inflation Score Calculation for Currency Pairs:
For currency pairs, we consider the latest reported CPI reading relative to what analyst forecasts were prior to the reported figure. 

Because a currency pair involves two unique economies, the software analyzes each currency individually, and computes a total score for the pairing.

For example, for EURUSD, we consider both the Euro, and the US dollar when scoring this pair's inflation reading. 

For the equation below, currency A would refer to 'EUR', while currency B would refer to 'USD'.

Calculation:
If currency A's latest CPI is HIGHER than forecasted, +1
If currency A's latest CPI is LOWER than forecasted, -1
If currency A's latest CPI is EQUAL to forecasts, +0

We repeat for currency B, but invert the impact on the currency pair
If currency B's latest CPI is HIGHER than forecasted, -1
If currency B's latest CPI is LOWER than forecasted, +1
If currency B's latest CPI is EQUAL to forecasts, +0
Inflation Calculation for Gold
For gold, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.
 
Component 1: (Change)
If latest US CPI is HIGHER than forecasted, -1
If latest US CPI is LOWER than forecasted, +1
If latest US CPI is EQUAL to forecasts, +0

If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, -1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, +1
If 1% <= latest US CPI >3%, 0
If latest US CPI > 3%, +1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder considers a high inflation environment to be bullish for gold as a baseline. However, if inflation is ticking up in the most recent data alongside strong economic output data, it could suggest that the US central bank may act to take a restrictive monetary policy stance. Strong economic data accompanied with elevated inflation can be bullish for the dollar, and headwind to gold. Specific to the inflation calculation, the EdgeFinder assumes gold to be most bullish when inflation is hot but cooling, or during severe recessionary periods. The EdgeFinder considers gold to be most bearish when inflation is under control.
Calculation for Indices & BTCUSD
For indices & BTC, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. Similar to gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

(US indices only)
If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, +1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest CPI <= 3%, +1
If latest CPI > 3%, -1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder typically views inflation to be the least threatening to these risk on assets when it is tamed and under control. Whenever inflation becomes too high or too low, it is considered by the EdgeFinder to be a potential bearish catalyst. If inflation is too high, monetary policy could become more restrictive and harmful to businesses. On the other end of things, if inflation enters a dangerously low level, it suggests that the economy is quite weak and could hurt corporate earnings and risk sentiment.
Calculation for Commodities (US Oil, Silver, Copper, Platinum)
For commodities, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, -1
If latest US CPI >= 1%, +1

The EdgeFinder assumes that higher inflation is considered a more bullish environment for commodities. This is because higher inflation means rising prices, and is often accompanied with higher demand for raw materials due to strong economic output. If however economic output data is found to be weak, that will be accounted for in the EdgeFinder's total score, and may act to counterbalance this inflation reading.

Employment Change

Employment Change

Under Maintenance

Unemployment Rate

Employment Change

Under Maintenance

Interest Rates

Interest Rates Scoring Breakdown

Scoring Concept:
The interest rate breakdown is designed to measure changes in the 2-year yield in the US and forecasts from central banks.
1:
Take the 7 day moving average of the US02Y (2-year treasury yield)

For Indices, XAUUSD, USOil, BTCUSD
If price is above the moving average, -1
If price is below the moving average, +1
In this example, the interest rate forecast for the GBP is unchanged. This means that UK100 will receive a 0 score for interest rate.

If the forecast happened to be higher than current rates, UK100 would get a -1. And if the forecast was below current rates, the index would receive a +1.
Scoring Interest Rates for Currency Pairs


For currency pairs
Concept: Uses current and next quarter’s forecasted interest rate for both currencies (Data from the Central Bank Forecast Page)

Currency A
If forecast > current, +1
If forecast < current, -1
If forecast = current, 0
Currency B
If forecast > current, -1
If forecast < current, +1
If forecast = current, 0
In this case, the forecast rate is higher than the current rate. So the NZD would get a +1 score.
Meanwhile, the EUR’s current and forecast are the same. No change will give the currency a 0 score.
If we’re looking at the EURNZD pair, we would get a -1 because a positive score for NZD would result in a negative score on the pair.

PMI

The EdgeFinder considers the change from previous data to latest data in mPMI & sPMI. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

Retail Sales

The EdgeFinder considers the change from previous data to latest data in retail sales. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.
EdgeFinder Features

Risk on /Risk Off Gauge

Risk on /Risk Off Gauge

Understanding the Risk Gauge
Description: The Risk Gauge Meter combines the price action of various risk-on/off assets and measures risk sentiment of the overall market. The score goes from -6 (strong risk-off reading) to +6 (strong risk-on reading).

The assets used are a combination of indices, commodities, and 10-year bond yields (VIX, SPX500, Gold, US10Y, DXY, JXY).
This metric is good for indicating which assets are going to be bullish or bearish. For example, if the risk meter is at -4, it suggests that USD, CHF and JPY could be bullish. If the risk meter is at +4, it suggests that AUD, CAD, NZD, GBP, EUR, XAUUSD, SPX500, could be bullish.
In this current example of the Risk Gauge Meter, monthly performance of risk-off assets is positive, the weekly performance is mixed, and the daily performance is risk-on.

If following days are also risk-on, this could be an indication of a shift in sentiment from risk-off to risk-on.
The bias output is scored this way:
-2 to +2 = neutral
-3 to -4 /+3 to +4 = “risk-off”/”risk-on”
-5 to -6 / +5 to +6 = “heavy risk-off/ heavy risk-on”

Price Forecast

Price Forecast

​Scoring Trend Reading (Price Forecasts)
The price forecast feature displays short-term projections for each asset, based on the trend reading metric, and standard deviation. Please note, these are general projections and may adjust as time passes or trends change.

To define trend reading, we use the daily chart and 3 exponential moving averages: the 5-day EMA, 8-day EMA, and 21-day EMA
W = 5 day EMA
X = 8 day EMA
Y = 21 day EMA
Here is our calculation for the trend, in the backend:
=if(and(W2>X2,X2>Y2),2,
if(and(W2<=X2,X2>Y2),1,
if(and(W2=X2,X2=X2,X2

Carry Trade Scanner

Carry Trade Scanner

​Understanding the Carry Trade Scanner
Want to collect swaps on the daily? The Carry Trade Scanner is a helpful tool to show you which pairs are the best ones to hold on to for positive swaps.

What is a Carry Trade? A carry trade is the process of borrowing an asset with a low-interest rate and reinvesting it into another currency with a higher interest rate. In other words, the currency you own is swapped for another by an institution. If the said pair you own yields a positive rate if you buy, then you will get paid when it’s swapped. On the other hand, if the pair yields a negative swap rate, you would need to short it to get paid at swap.

How it works: The table shows several different currency pairs. In order to calculate the swap rate, it takes the base currency rate minus the quote currency rate to get the interest rate divergence. The positive carry direction tells you which direction you would have to trade in order to collect a positive swap. For instance, if the base minus quote is positive, you would need to buy in order to get paid interest. If the difference between base and quote is negative, you would need to short in order to get paid interest.
Functionality: This metric is good for finding which pairs will pay positive swap rates. If you’re looking to take a carry trade, this table will show you which pairs to long or short in order to collect a swap. So why would traders want to see this? Some traders may look to avoid paying swaps so they’ll make sure they don’t hold a pair through the swap. Others might just want to collect interest through the carry trade regardless of price action because of their tolerance to potential lower moves.

Historical Backtest

Historical Backtest Feature

​Understanding the Historical Backtest Feature
Concept: The Historical Backtest section will show a 30-day look-back period on the EdgeFinder, showing the recorded scores each day for the selected asset. This feature is designed to show traders the change in EdgeFinder sentiment and price moves over time. This will help traders know when sentiment might be starting to switch from one bias to the other.

Functionality: When a trader sees an asset's score become weaker to the long or short side over time, it could suggest that sentiment is going to flip.

Example:
Here is an example on the SPX500. As you can see, price was moving higher at the same time the EdgeFinder's sentiment was at a strong bullish reading of +7. However, as price begain to show sings of bullish weakness, the scanner downgraded its score from a +7 to a +6. And eventually, the score reached as low as -3.

The EdgeFinder has the ability to adapt to market conditions based off a series of fundamental and technical data. The first sign of weakness in score led to over two weeks of selling on this index.

EdgeFinder Smart Alerts

EdgeFinder Smart Alerts

Purchased Separately
Very Bullish Alert
Conditions: If the score changes to a 6 or higher from a score of 5 or lower, Very Bullish Alert
Frequency: Update times hourly

Very Bearish Alert
Conditions: If the score changes to a -6 or lower from a score of -5 or higher, Very Bearish Alert
Frequency: Update times hourly

COT Bullish Alert
Conditions: If an asset’s Net Change is 2% or more on the Smart Money Tracker Page, Smart Money Went Long. If an asset’s Net Change is -2% or less on the Smart Money Tracker Page, Smart Money Went Short.
Frequency: Update times hourly

COT Bearish Alert
Conditions: If an asset’s text title is highlighted in red on the Smart Money Tracker Page, Smart Money Went Short Alert
Frequency: Update times hourly

New Edge Alert (Bullish)
Conditions: If an asset’s score changes from a <=2 to a >=3, New Edge Alert
Frequency: Update times hourly

New Edge Alert (Bearish)
Conditions: If an asset’s score changes from a >=-2 to a <=-3, Turned Bearish Alert
Frequency: Update times hourly

Discord Formatting Example
1)
:warning: New Strong Bias Alerts!:muscle:
Strong Bullish:chart_with_upwards_trend:
[pair]
[pair]
[pair]
Strong Bearish:chart_with_downwards_trend:
[pair]
[pair]
[pair]
_______________________________________________________________________
:warning: Latest Score Flips!:repeat:
**Bull to Bear**:ox: :arrow_right: :bear:
[pair]
[pair]
[pair]
**Bear to Bull**:bear: :arrow_right::ox:
[pair]
[pair]
[pair]

2)
:warning:New Smart Money Positions!:bar_chart:
**Net Short Bias**:small_red_triangle_down:
[pair]
[pair]
[pair]
**Net Long Bias**:small_red_triangle:
[pair]
[pair]
[pair]
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Signals
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
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