3 MA Crossover Trading

Quote from Miragers:

I have been trading a 3 EMA crossover system as my main entory signal along with a slow stochastic for my exit signals. Does anyone else have any experience in using a similar approach? Any opinions on using MA's instead of EMA's ?
More...

Sobemark started a thread a while back using a 3ma and 24ma (i think also included or at least referred to a 200ma as well). i seem to recall he had a thing for multiples of 8.

http://www.elitetrader.com/vb/showthread.php?threadid=44012

anyway, may be a thing or two in there of use to you. i know he traded equities, don't recall if he specified what else. i made a couple of trades off it. didn't seem to fit my style, so i kept on looking ... they were both profitable trades, and i didn't want to start that kind of habit :D

hth

take care :)

omni
 
Quote from IIAce:

There's something I must be missing here. Can anyone tell me the logic behind using MA's as entry signals? Everyone realizes the mathematical fact that if a stock is rising every day, its short term MA's will be above its long term ones right?
More...



Correct me if im wrong but, in my humble opinion MA's are perfectly logical entry and exit points for several reasons. First MA's are probably the simplest of all technical indicators. They simply represent the average price of a stock or any other financial product over a specific period of time. The shorter the time period the less information goes into plotting the MA and the more closely it reacts to current price changes. If it is longer then more information goes into calculating the MA and it reacts more slowly to new price changes. Plotting MA's on top of your price you can see weather price is constantly going below its average price or moving above its previous average. Second, you have to understand that MA's cant be used effectively to predict in what direction prices are going to move in the future. They can only show you what the prevailing trend currently is or if there is a trend at all. The can also show you where likely areas of support and resistance are going to be. All you have to do is make sure that you are trading with the trend and not against it trying to anticipate a reversal. If you do this you will probably loose a ton of money, I know I did until it finally hit me. Third, you can use the crossovers of 2 or 3 MA's as entry or exit signals when the trend does finally change. If you have a 4 10 and 25 MA the 4 MA will follow prices closely because less data goes into calculating it, the 10 will be in the middle and the 25 MA will react last to price changes because more data is included in it. So ideally you want to enter a trade when the MA's are arranged in that order. This represents a strong trend and reversals are easy to spot when the short MA closes below the medium and then below the long term MA. This means that prices are now closing closer and closer to their previous averages and the trend is probably heading for a correction or a reversal. If you combine a momentum indicator like the stochastic to confirm these crossovers you can have an fairly accurate idea of whether a stock is in a trend and in which direction the trend is moving and how quickly it is going there. Ex. If prices are closing above the 4 MA and the 4 MA is above the 10 and 25 MA's by 2 or 3 dollars then its probably time to tighten those stops because eventually prices will move back towards their longer term MA's. Man that was alot of crap :) Hope that helps
 
Quote from IIAce:

These websites don't answer my question. They don't tell me WHY MA's should work or any of the logic behind using an MA. What makes it any better than looking at a chart and buying when it starts moving up (and selling with something like a trailing stop)?
More...

Ours is not to reason why, ours is but to sell and buy! :)
 
Quote from JMowery1987:

I use a 14, 50, and 200 intra-day MA's on the 1 minute timeframe, but I actually use it as locating trend and price bounces off the MA's.

On my little Forex thing I got going I use a 50 and 200 MA on the 4 hour timeframe and use it to determine good trades, works pretty well with a good bit of discretion thrown into the mix.
More...

Im with you on the bounces off the MA's if the stochastic supports the price trend I think these turn out to be about 90% profitable trades as long as you exit when the stochastic reverses direction. Did you try any other time periods? Ive been looking at trying hourly or 15 or 5 min but just cant decide if its worth to switch from the 30 min charts.
 
Quote from Miragers:

Im with you on the bounces off the MA's if the stochastic supports the price trend I think these turn out to be about 90% profitable trades as long as you exit when the stochastic reverses direction. Did you try any other time periods? Ive been looking at trying hourly or 15 or 5 min but just cant decide if its worth to switch from the 30 min charts.
More...

Although 90% is quite a push for solid trading, it more than likely is possible if a person makes less trades a day, I make a lot more than just a few so my winning % is not near 90% but there have been days where I have done 80%, but not as often lately.



I only trade 1 minute timeframe, that is what I started out with, and that is what I trade now, just used to it, but my average holding time is more often less than a minute, or the close of the next bar.

Now if I was looking to do a swinging type of strategy, and I was using only moving averages, I know I could be profitable doing that... maybe potentially even more profitable, I just have issues holding for longer periods of time.

But using moving averages, along with another confirmation (like support & resistance) can be very profitable and can provide a nice winning % and relatively low risk trading opprotunities.

I especially like when price crosses the 200 intra-day MA on the 1 minute timeframe, usually when it does crossover, it means a very big move, and I also like it when price has not been near the 200 MA for awhile, and then it touches, I usually always expect a bounce off the MA, even if it isn't very large as that doesn't matter since I'm scalping it anyways, it is very profitable.

I used to hang out in a chat room daily, and a lot of people started attaching the 200 MA on a 1 minute timeframe and they enjoyed using it and agreed that it did mean something when price interacted with that MA.

I don't know why it works, it just does, and I will exploit it for as long as it does, and plus, I can't really hurt my system by telling anyways, because the more people that trade based off of MA's then the better for me and others that use it.

So woohoo?

:cool:

I'm going to sleep now, I type too much at night.
 
Quote from jmiles301:

dont bet the house :cool:
More...



Nah ofcourse not. I limit share size and exit if it goes against me. I usually buy half a position on the second bar after price has moved up to the MA and then moved back away from it. Then buy the other half when it has closed above or below the short MA if the stochastic does not look like its going to reverse. Guess 90% does sound a bit much but I do place less trades each day. Sometimes only 2 and this week I have only done 1. When I open the position I plan on holding it as a swing trade but if price moves too far away from the short MA or the stochastic goes to an extreme level and stays there I will usually close the position and wait for it to retest the MA again. I can post some of my trades if you want to see the results and setups.
 
Here are a few of my trades from the last week or so. These were done with hourly charts when I was trying them out.


06/28/2006 10:56:13 Bought 300 VLO @ 63.13
06/28/2006 11:07:19 Sold 300 VLO @ 63.3144
(not my best trade I was a little late in on the entry and got out quick becase the stochastic started topping out)

06/23/2006 12:20:36 Sold Short 100 DNA @ 77.27
06/23/2006 12:30:41 Sold Short 100 DNA @ 77.44
06/23/2006 12:44:54 Bought to Cover 200 DNA @ 77.10


06/22/2006 13:38:18 Sold Short 200 FO @ 69.62
06/22/2006 13:45:55 Bought to Cover 200 FO @ 69.48

06/21/2006 15:37:26 Sold Short 200 ALL @ 53.44
06/22/2006 09:30:27 Bought to Cover 200 ALL @ 53.20

06/21/2006 14:59:28 Sold Short 100 DNA @ 77.66
06/21/2006 15:17:43 Sold Short 100 DNA @ 77.81
06/22/2006 09:33:32 Bought to Cover 200 DNA @ 77.79
(it gapped way up on the open and hit my stop limit but it was not that big of a loss)

06/20/2006 14:40:01 Sold Short 200 ALL @ 53.48
06/21/2006 09:30:31 Bought to Cover 200 ALL @ 53.01
 
Quote from IIAce:

There's something I must be missing here. Can anyone tell me the logic behind using MA's as entry signals?

Everyone realizes the mathematical fact that if a stock is rising every day, its short term MA's will be above its long term ones right?
More...
=============================

Ace;
Yes the logic behind ma entry is ma are a trend measuring -smoothing tool .Dont pay much attention to ma cross anymore


Never did really keep buying into ma goof in sidewys trends[chop];
that is market & traders fault not moving average fault.

Not sure what you mean in last sentence since stocks dont rise every day;ours is not to question why , ours is really sell & buy
:cool:

Thats personal , EMA or simple ma, both help;
test them both & you be the judge. Wisdom is profitable to direct
 
You must log in or register to reply here.
Back
Top