Entry Point when Using a Moving Average Crossover System?

C

caplan8293

Hi All,

I am a little confused as to when to actually place the buy order when using a system such as a moving average crossover system.

Lets say the MA is at $20.50 and I am going to buy as soon as the current price hits $20.51. The problem is that when the price hits $20.51 and I look at the real-time quotes, the price constantly starts fluctuating from $20.49 to $20.51. Therefore, even though the current price went over the MA, it immediately went back down a penny or so, then back up, then back down, etc.

My question is, should I place the buy order immediately after the crossover, or should I wait a while until it seems that it will not go back under the crossover point? I am concerned that if I wait too long, I will miss a lot of the trend...

Any insight will be appreciated. Thanks.
 
You say "a" moving average XO system rather than "your" MA XO system. Therefore, what you "should" do depends on what your testing has shown.

The MAs haven't crossed until the bar that seems to be motivating the XO has finished. Therefore, you don't have much choice but to wait until the following bar to make your entry. If the XO is genuine, you'll be fine. If it's not, you may be stopped out. So now you have to decide how wide a stop you're willing to apply, which, again, will be determined by the testing you do.

If you haven't done any testing of this, of course, then your guess is as good as anybody else's.
 
That's part and parcel the classic dilemma of trading a MA XO. You should consider other factors/filters as well for being in the trade, not just that the MA crossed. You may want to decide to enter after the MA crosses AND 'this' does 'that'. Or 'this' is a go, 'that''s a go, so if the MA crosses up, I'm in. "This" and "that" represent your other factors/filters for the sake of this illustration. If you're afraid of missing a trend within seconds, trade longer term. Or by being 'late', you may find a trend that you're somewhat late on entering serves as a better confirmation for you that the trend is indeed a trend and the MA less likely to X back down.
 
Quote from caplan8293:

Hi All,

I am a little confused as to when to actually place the buy order when using a system such as a moving average crossover system.
More...

How about never. It is unlikely, IMO, that you will ever make money from an MA crossover system.
 
Quote from Tonkadad:

Don Miller at one point was the MA cross over man, I don't know if he still uses it or not. He is assosciated with Trading Markets

http://www.tradingmarkets.com/.site/stocks/commentary/dmqqq/

Enthios has a system on his site called the Enthios cross, take a look.

http://www.enthios.com/trading/EnthiosCross.htm

regards,

Bruce
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As GMS pointed out, an MA crossover is only the starting point. The only thing crossing MAs tell you is that price is moving. And you don't need a fancy-ass MA crossover system to tell you that.
 
Quote from Tonkadad:

Don Miller at one point was the MA cross over man, I don't know if he still uses it or not. He is assosciated with Trading Markets

http://www.tradingmarkets.com/.site/stocks/commentary/dmqqq/

Enthios has a system on his site called the Enthios cross, take a look.

http://www.enthios.com/trading/EnthiosCross.htm

regards,

Bruce
More...


Its pretty funny to goto a trading conference and watch presenters use keywords like moving average crosses or using bollinger bands. The facts are that these people tend to sell books and while it sounds practical.. its much better on paper then in trading.

I went through it the hard way, and came out using my own black box system largely based on candlesticks. Trying going to Barnes and Noble and flip through some of the advanced charting books. They will give you a small edge needed to rake in profits.

Personally, my mind starts hurting after reading all the charts.. but for the serious trader, they will do the work. Any simple MA systems.. well, just try it with money and make sure you have money to blow.

Don Miller I believe learned Jea Yu from UndergroundTrader.com. Would suggest you subscribe to them if you really want to pursue MA's. Otherwise plant yourself in from of the Technical section at your bookstore.. and plan to read until it hurts.. and then some more if you really want to make money.

I would HIGHLY recommend Trader Vic - Methods Of A Wall Street Master by Victor Sperandeo. Read it multiple times. I can only say that it changed everything for me. Also any Nison Candlestick book will go far.

You need brains in this business. Don' blow it on books or coaches that cost over 100 bucks. You can't buy a system otherwise i would have done it a long time ago.
 
Quote from lindq:

How about never. It is unlikely, IMO, that you will ever make money from an MA crossover system.
More...

Agreed.

caplan........Also read the sammybea post on page two of this thread.
 
Quote from sammybea:


You need brains in this business. Don' blow it on books or coaches that cost over 100 bucks. You can't buy a system otherwise i would have done it a long time ago.
More...

My thoughts exactly!
 
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