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Using historical data for the Long to Short position ratios, this composite item creates an index that calculates the average of the ratio of long positions to short positions of the Majors (Pairs of currencies that involve the U.S. Dollar).
The index is based on data downloaded by the following item: Forex Long to Short Position Ratios. It gets symbols whose name starts with "USD" or ends with "USD". Then for every Forex pair, it gets the long/short position ratio for currency pairs where the dollar is the base currency (Example: USD/JPY, USD/CAD) and (100 - long/short position ratio) for currency pairs where the dollar is the counter currency (Example: EUR/USD, GBP/USD). The values are then averaged and added to a new composite symbol "LS_Dollar".
Even though, the composite index is computed based on daily data, you can update it and perform the calculation based on any intraday time-frame. This is possible because the Long to Short position ratios data is available in an intraday database. For the different currency pairs, you can get intraday data using Forex Intraday Data or One-Minute Intraday Data for Currency Pairs.
Besides the Long to short position ratios downloader, the composite requires the Base or Counter Currency function. This function is called in the composite formula and it allows us to determine whether the U.S. Dollar is the base or counter currency for each Forex pair.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
