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market matrix

A screener for your trading business week

Imagine a tool that lists all the financial markets with which you work regularly, taxonomizes them according to a set of robust indicators and eventually plots them in charts that make it easy to detect what's going on right now and what will likely happen in the future.

Our trading system is based on two Market Matrix, realized weekly. The first (Inversion Market Matrix) shows those commodities and currency that, after following an uptrend or a downtrend for some time, are preparing to a trend reversal. The second (Trend Strenght Market Matrix) shows how strongly the various assets are following a certain trend.

Those involved in financial management at the professional level (fund managers, private bankers, asset managers, advisors, financial planners, etc.) cannot enter or exit positions with the speed and agility that are the prerogative of the independent traders: the capitals handled are often large and many days or even weeks are needed to open or close positions. In this context, repent is simply a luxury that one cannot afford, because going back is almost always too costly in economic, psychological and reputational terms.

As the transoceanic navigators, also financial managers need accurate and updated maps of the global markets in which they sail every day. Indices, bonds, currency and commodities: without a compass, good maps and an efficient GPS it's very easy to become disoriented and end up in some shallows or storms, risking to lose the entire ship.

At Trading for Purpose we tried to put ourselves in the shoes of financial managers, and wondered what kind of 'map' could have been useful to them. After several studies, reflections, trials, errors and unexpected enlightenments, in the end we produced our Market Matrix, of which today we admit to be quite proud. Imagine a tool that lists main future markets (currencies, energy, indices and bonds, grains, meats, metals and softs), taxonomizes them according to a set of robust criteria and eventually plots them in a chart that makes it easy to detect what's going on right now and what will likely happen in the future.

Within the Market Matrix, each financial instrument is examined according to six key questions:

1. the instrument is currently uptrend, downtrend or trading range?
2. is it visible a geometric pattern with bullish or bearish outlook?
3. the internal indicators hint at a continuation of the trend or a possible reversal? 
4. seasonality of the instrument is currently bullish, bearish or neutral?
5. the ratio with one or more inversely correlated instruments has reached levels that can suggest a possible reversal (correlation analysis)?
6. the volume spread analysis (VSA) offers enlightenment on the current market dynamics?

If they are available, also option market data are included into the analysis, for they often provide important clues.

This whole complex market analysis finally allows you to place each individual instrument within a matrix diagram allocating significant markets in eight different categories:

1. strong uptrend;
2. strong downtrend;
3. uptrend in the process of weakening;
4. downtrend in the process of weakening;
5. consolidation after a rally, which preludes to a resumption of the rally;
6. consolidation after a drop in prices, which preludes to a resumption of the descent;
7. consolidation after a rally, which is a prelude to a reversal (down);
8. consolidation after a descent, which is a prelude to a reversal (rally).

Within these categories, the individual markets are also rated from -8 to +8 in order to define the greater or lesser intensity with which they are showing this or that particular price dynamics. For example, a market belonging to the category 'consolidation phase after a descent, which preludes to a reversal (rally)' with a score of +4 is more likely to start a rally than another instrument belonging to the same category but with the lower score of +1.

Of course, Market Matrix are maps and not autopilots. They alert us when the conditions are ripe to determine some movements in price, but do not tell us exactly when to enter or exit a specific trade. To manage the actual trade suitably, every operator must refer to his more efficient and experience-proven trading system. Having said that, we'd like to add that, especially if continuously analyzed week after week, the Market Matrix proves also useful as a 'time to market' tool.

If you want to try and get more info on the Market Matrix please write to 


Matrix for market analysis in futures trading

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