I told myself I was not going to respond to threads belonging to other ET members anymore. So, I might end up regretting this, but here goes anyway...
Moving averages do indeed get a bad rap, especially on this forum. But after carefully studying price action as objectively as I possibly could (between 2011 to 2015), in the final analysis, moving averages and price ranges turned out to be the only two indicators I trusted. From the time I joined ET three years ago (August 2017), many have tried to convince me that I shouldn’t—but my experience has suggested otherwise. (Since 80% of all indicators involve a time period or an average in the calculation, why not simply use them directly?)
Last year I found a guy who concurs with my point of view. You can get a detailed explanation or description of how we view moving averages by conducting a search on YouTube using keywords: “
No Nonesence Forex Baseline Patrick VP.”
(I’m referring to the video Patrick [VP] recorded a year ago—not the one Dave recorded last month.)
For example, by simply glancing at the slope of the yellow, red, and blue moving averages on this chart and their positional relationships with one another, it becomes fairly obvious to me as to when price begins rising and when it starts falling.
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And from my perspective, the problem with latency or lag is easily handled by dropping down to a lower time frame. Unlike any other system with which I’m familiar, the way I incorporate moving averages has been to identify a specific baseline to track the direction of price from the perspective of
each temporal context of interest to me (i.e., one-minute, five-minute, fifteen-minute, thirty-minute, and sixty-minute time frames). In other words, I do not use the conventional 10-, 20-, 50-, 100- and 200-period MAs.
This means that if I were to use SMA (10) to track the hourly trend on a 60-minute chart, I would use SMA (120) to do the same thing on a five-minute chart, and rely on faster moving averages within that same context to pinpoint precise entry and exit levels from a one-hour perspective, with the result being essentially no lag time/latency.
As you can see, using this approach has put me way ahead during the last two 24-hour market cycles...
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Unfortunately, when I woke up this morning, I found that EURAUD had handed me a $71.44 loss. When I checked my charts to see why, I discovered that had I been monitoring the position instead of going to bed, I would have witnessed the moving averages convey to me that the pair had reversed direction
immediately after I entered the position and I could have gotten out early to minimize the hit, and possibly even sold the asset to promptly recoup my loss and then some.
