Currency strength meters: how much do they lag?

[Shadow Trader]

Currency strength meters aggregate movements across several pairs to show which currencies are strong and which are weak. They look useful for choosing pairs: buy the strongest against the weakest.

The tools work from price data that has already happened, so they inevitably lag. By the time the meter shows a currency as strong, the move that made it strong may be exhausted.

Different meters also use different calculations, pair selections, and time windows. Two tools can disagree about the same currency at the same time.

They are better for context than for timing. A meter can show that the dollar has been broadly strong for the past hour, which helps explain why dollar pairs are moving together. It cannot show whether the move will continue.

A test is to record meter readings at entry for a series of trades and compare results with the readings. Does trading in the direction of the meter improve results? Or does it lead to buying tops?

Have you tested a strength meter against your own trade results, and what did you learn?