3 MA Crossover Trading

guys...i played around for months with triple moving averages of all sorts of varieties on bloomberg. I have come to find that simpler is better.

stick with the basics...50,200 crossover for longer term. for shorter term just stick with a double moving average...maybe 3,5. keeps life easier.
 
Just use 1 at a time.
If you follow it every single time after over sold or over bought conditions, you're bound to hit a couple of good trades.
 
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?
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Well Ace,since theyre a derivative of price action;
no problem with the entry logic, with discretion........................
Easy on the eyes;
and it is wise.

Right, & not saying one needs them, but like 'em[ma,ema] myself/stocks;
Answer, right again,= but depending upon the length of ma/ema,[50,200 dma.......] & time.

:cool:
 
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...
Right. You must keep in mind the whole point of a MA: to smooth price by reducing noise (i.e., reducing the high-frequency variations in price).

In the beginning, there was just the single MA crossover: if price crossed above the MA of choice, that was a buy signal; when price crossed below the MA of choice, that was a sell signal. Unfortunately a very long-term MA is required in the single MA crossover to reduce whipsaws. Whipsaws occur when price crosses the MA in one direction, then on the next bar price recrosses the MA in the opposite direction, and possibly on the third bar price crosses the MA again in the original direction. Trying to follow all these conflicting signals will play havoc with both your trading account and your emotions. The only solution is to use a very slow MA but of course that emphasizes the delay that is associated with real-time MAs.

An alternative is the double MA crossover, where price is replaced by a fast MA that has less noise and will hopefully cross a slower MA with less chance of whipsaws. Finding the right combination of fast and slow MAs is a challenge and will vary from stock to stock and from trading period to trading period.

There are those who believe the "perfect" MA would be the Holy Grail, or something close to it. The perfect MA would be used all by itself as a signal generator. I found this in another trading forum, edited here slightly for clarity:

"The ultimate moving average of course would be one that cancels out all noise but [still] follows price [closely]. If the [ultimate] MA is going up, you would buy. If the [ultimate] MA is going down, sell. This moving average does not exist but for me that would be the ultimate."

I agree with this poster's assessment of the ultimate MA but not yet with his conclusion that it doesn't exist. The search continues. :)
 
I use a 500 sma on 15min charts. scalps with a 50 ema on 5min charts.

price crosses above - buy
cross below - sell

that's it.
 
Quote from Jaytrade:

I use a 500 sma on 15min charts. scalps with a 50 ema on 5min charts.

price crosses above - buy
cross below - sell

that's it.
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How do you exit the trade?
 
That's where you need to be a little, "creative" ...In other words, fudge a bit...

1. Either stay on till protective stops are hit/next signal comes...
(I FAVOR this way because then you only miss out on taking profit on itty bitty trades, I want to catch the full 300-2,000 pips :D)

b. take profit if it pays the rent/groceries/porn habit...er I mean prostitutes, that's an unofficial rule too, hehe <:)

Or

2. Exit at profit when you think time is the time is ripe. VERY subjective...not a good way to trade, unless your profit is 2-5 times greater than your avg. loss, then it's fine.



The price cross works, but to take out a bit of noise, one can throw a 5 or 10 SMA up for the cross of the 500 SMA...

Usually, you should take every signal and just follow it religiously. That way you don't miss the major break out...



Trading for the sake of trading will make you TONS of money...because you're not exiting early trying to pick a sweet spot...

The pigs sucked up the eur/usd in early december, and they kept buying..that's why u need to hang on to your trades until an opposite signal hits you in the head...

that also means 100 pip draw downs...so you must trade in the smallest size according to your account...no crazy "All In" moves..this aint - No Limit Hold Em' Fellas :cool:


If you trade small and know what's happening, you basically wouldn't need stops. You take the next signal and reverse your trade.
 
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