Does buying the strongest currency and selling the weakest one pay?
Is Currency Strength Trading Profitable? 72 Settings Tested
Finding
It did not. Across eight major currencies and their 28 pairs, none of the 72 momentum conditions — three timeframes, six calculation periods, four holding periods — was profitable in both 2024 and 2025 after spread. The best 2025 momentum setting, an 80-day calculation with a 24-day hold, returned −720.1 bps in 2024. The reverse worked in this sample: selling the currencies that had been strongest over 20 trading days, buying the weakest and holding about 12 days was profitable in both years for all five rank combinations tested. An equal-weight basket of the four pairs built from the top two and bottom two currencies, with entries staggered across 12 start phases, returned +384.1 bps in 2024 and +367.8 bps in 2025 after spread. Not all 12 phases were profitable in both years, and the rule was found by comparing these same two years.
Key results
- Buy the strongest, sell the weakest
- 0 of 72 conditions profitable in both years
- Fade 20-day strength and hold about 12 days
- profitable in both years for all 5 rank combinations
- Four-pair basket staggered across 12 start phases
- +384.1 bps in 2024, +367.8 bps in 2025 after spread
Scope
- USD, EUR, JPY, GBP, AUD, NZD, CAD and CHF with all 28 pairs, 2024-01-01 to 2025-12-31
- Hourly, four-hour and daily bars; 12,439 / 3,222 / 627 bars with every pair present
- 3 timeframes x 6 calculation periods (5 to 80 bars) x 4 holds (1, 4, 12, 24 bars) x 4 windows x 2 directions = 576 runs, extended to 2,880 across 5 rank combinations
- Equal size per single-pair trade; capital split equally across the four-pair basket
Method
Each currency's strength is its change against the other seven, averaged with equal weights, and the eight are ranked. Entries fill at the next bar's open after the signal bar closes; exits fill at the open after the fixed hold, when the currencies are re-selected. Recorded bid and ask are used; commission, slippage and swap are not included.
Limitations
- The universe contains eight major currencies and their 28 pairs. It excludes emerging-market currencies, metals, equity indices and crypto.
- The window is only 2024 to 2025 and does not represent long-run currency momentum or every monetary-policy regime.
- Strength is equal-weighted across seven opponents. Trade weights, volatility scaling or carry adjustment would produce different meters.
- Exits are fixed holds. Stops, targets, rank-cross exits and trailing exits are outside this grid.
- Recorded bid/ask is included; commission, slippage, financing and size-dependent execution are not.
- The daily 20/12 fade was also discovered from the 2024 to 2025 comparison; 2026 and later remain untouched rather than validated.