Hi IF,
I understand what appeals to you about trading mechanical systems. They are simple, you don't have to think, just follow the rules. It takes the pressure off when trading.
The problem is that they do not 'work' really well. What that means is they have big drawdowns because they are inflexible and markets are not, i.e., markets change character over time.
From what I know, system traders use 3 methods to improve system performance.
1. Trade the Equity Curve (trade when the EC is trending up, don't trade when it is trending down).
2. Trade multiple, uncorrelated systems.
3. Modify system parameters frequently to accommodate changes in the market.
Simple mechanical moving average systems usually don't fare very well.
A moving average is a digital filter, when you choose its look back period you are tuning it to a specific cycle. You can use it to profitable trade when the dominant cycle in the market is approximately equal to the tuned period and longer because it is a low pass filter (i.e., it filters out high frequencies). When the dominant market cycle has a short period (congestion or chop) the MA system becomes unprofitable.
The dominant cycle in the market varies (albeit slowly) over time. There are in fact many dominant cycles present in the market and the bar sizes you use determine which ones you will see. If you recall, a couple of times people posted charts that did not 'work' with jjrvat's system. What did jjrvat do? He changed the bar size until the chart 'formed up' (BTW, this practice is not uncommon among discretionary traders) and the system 'worked' again. What he did was adjust the dominant cycle until it was in tune with the indicators.
Also recall that one of jjrvat's rules is only trade 30-60 minutes per day. Why is that rule important? Because in light of the market fractal being traded and the other trading rules, the dominant market cycle is not likely to change enough in such a short time period to adversely affect the system.
Support and Resistance are 2 very important trading concepts that you seem to ignore. I am not talking about calculated numbers like Floor Trader Pivots or Fibonacci retracements but previous Pivot points, previous areas of Congestion and previous Gaps.
Prices are attracted to these price areas like a magnet. Prices tend to stall and/or reverse at these price zones. It is very important to know where those price zones are so you are prepared to deal with their effects.
Bill
