With the right trade/money management anything can be made useful. O/H/L/C/V/OI, prior swing pivot points, breakouts, breakdowns are all real actual data points. MA's aren't. I just prefer the real stuff.
Anyone use moving average indicators?
- Thread starter Saltynuts
- Start date
Yes, the stuff you list are data, and the primary source for data is always least lagging and best quality. But secondary data (price:EMA's over time) can be turned into metadata which allows two different trends on two different charts to be compared at least somewhat objectively.
This is how to quickly and helpfully define and compare the suitability for your given strategy of three uptrends, say there's one on a stock index chart, one a forex pair and the other on a commodity.
I make $$$'s off SMA, BB's and Envelopes so it can be done, but how much is tape reading and experience, without both of those I doubt I could avoid the traps enough to be positive.
Sadly, you've got to put your 10 years in, very very few people get to short cut that
People make money via astrology, don't get me wrong utter BS but it's enough of a crux to get them into a trade and likely doesn't influence them after that hence still profitable allegedly!!
Sadly, you've got to put your 10 years in, very very few people get to short cut that
People make money via astrology, don't get me wrong utter BS but it's enough of a crux to get them into a trade and likely doesn't influence them after that hence still profitable allegedly!!
Like any tools, you need to know how and when to use which tools. For example, if your stock is trending up slowly, use a slower MA keep you in the trade. But if the stock starts going parabolic, it is best to use a fast MA so you know sooner that the party is over.
Can you unpack this a bit more? Let's say you establish trend based on a 20/50/100/200 ema stack (no crosses - strong trend) - what's the entry point?
I've been doing this and it's been the most successful technique I've had. I use a daily shadow across 50 or lower as entry.
But - I'm wondering how to strengthen this system, especially by finding earlier trends!
I have used moving averages for many years. My current system is completely based around Dynamic Moving averages using only Fibonacci Numbers as the periods. I think a lot of people don't like moving averages because they think only in terms of a "Cross Over" as the only viable use case as a strategy for using MA's and are not open minded about other ways they could be useful. I attached a pic of how I use this. I wait for the Moving Averages to align sequentially, then I wait for it to open between the Lowest and the Highest MA, then I look for a close in this case, below the lowest MA for a short trade and I scalp these small trends on tick charts that happen 10 to 20 times a day. this is a pattern that repeats its self over and over no matter how far back in time you go.
This is something that I have added filters too, and developed over 10 years, it looks easy on the surface, but what I am showing you is not the complete system, but its just a great starting point for those of you that are looking for a base or foundation to develop your own strategy using MA's. you could use this idea a hundred different ways if you are open minded about it.
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Post-retracement trend-resumption, maybe?
There are countless ways of identifying those: including the good, the bad and the ugly.
If you want to look at it in terms of moving averages, maybe something like "When the price dips below a 10-period MA and then crosses back above it again, with those other MA's not having crossed each other and the 100-EMA still rising?" That should be at least a "reasonable" entry-point (for a long trade, of course)?
(How often it happens is another matter. Not necessarly "10-period" specifically, but just to illustrate the idea? That's just one very simple example - perhaps too simple.)
"Strengthen" can mean different things to different people, can't it?
Some people mean "finding higher probability entries", i.e. entries with a higher win-rate (this isn't my approach and I respectfully suggest that it probably shouldn't be yours, either).
Some mean "strengthen the overall results" by trading more frequently, even if that incurs a slight overall drop in win-rate (that would be more my approach).
You could do that, perhaps, by trading the same thing but on a faster time-frame so that you get more trades in?
My experience of doing that sort of thing is that the decrease in overall win-rate (which there can easily be) is more than compensated for by the increase in trading frequency.
Key concept: the inverse correlation between overall win-rate and trading frequency is a non-linear one (and there are reasons for that), and some people find that "faster" works in their favour, overall - and I'm one of them. "Just saying" ... (many will disagree, doubtless, but sometimes through prejudice rather than through statistical analysis).
PS: The pre/post-entry trade management things (including position-sizing, stop-loss placement and adjustment, and target(s)) are always going to be more important, collectively, in terms of their overall influence on the results, than the exact entry-point! Don't fall into the trap of imagining that "if you can just find better entries, everything else will somehow take care of itself": it won't!
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This Quote by Xela is very important, I cant even express that enough. So I have Several strategies tied into a "SYSTEM". I have an entry Strategy, that has been developed over time, then I have an exit strategy that is just as complex as the entry but completely different, then I have a money management strategy that determines the risk of each trade to figure out how many contracts to trade, and then there is an In trade management system that determines how and when to exit a trade early and cut losses.
My Stop losses are extremely tight, I am able to do this because I get good entries, so everything has to tie in. Be open minded when it comes to all aspects of your strategy. If I get stopped out, that means it was not an ideal entry, even if it goes my way afterwards, so it literally pays to have a tight stop that works in your favor.