problems with MA-crossing

B

bora

I know a lot of traders use MA's and a lot traders find them useless.
My question is when your trading is based on crossing MA's, how do you know when they cross? In theory, backtesting MA crossovers is easy because you know exactly that the two MA's have crossed. But in real life you don't know:2 Ma's cross each other, a few minutes later they don't cross anymore.. 1 minute later they cross again and finally they don't cross...If you would look at the historical chart you won't find this crossover. But when your trading is based on crossing MA's you have a problem. You have to get in, 2 min later out, 2 min later in , 2 min later out etc this will cost you money. Do you understand what i mean?
Thanks
 
You have to wait for the bar to close to avoid those intrabar false crosses. Also, generally you'd use one or more additional studies to confirm the cross since just using just a single MA crossover is most subject to being whipsawed during choppy sideways trading.
 
I use MA crosses all the time. Part of the secret is not getting in at the top of the line, but at the bottom when it pulls back. I find they work very well, but only during high volume times......9:30-12:00 and 3-4.......
Use bollinger bands to determine if they have room to run.
I hope this helps?
 
Quote from bora:

I know a lot of traders use MA's and a lot traders find them useless.
My question is when your trading is based on crossing MA's, how do you know when they cross? In theory, backtesting MA crossovers is easy because you know exactly that the two MA's have crossed. But in real life you don't know:2 Ma's cross each other, a few minutes later they don't cross anymore.. 1 minute later they cross again and finally they don't cross...If you would look at the historical chart you won't find this crossover. But when your trading is based on crossing MA's you have a problem. You have to get in, 2 min later out, 2 min later in , 2 min later out etc this will cost you money. Do you understand what i mean?
Thanks
More...

1 minute they cross, you enter.

Next minute they cross again, you enter.

Another thing is it, when you backtest it, the signals are triggered when the bar ends. When you have the MA updated every tick, it's a different testing criteria making it a different signal. End of bar signal and Intra-bar signals are different signals.

If you view both of them as one, you'll get problems.
 
Yes, I trade MA crosses every day all day.
It is not good as an automatic strategy though.
There are some variables that only experience tells you to avoid.
And cannot be programmed in unfortunatly.
 
Quote from Katrina Johns:



thanks for the link. one question though -why is it that the 3X13X39 MAs are sooo important. Almost seems satanic:D
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They're not, at least in and of themselves. The intent, as stated, is to reflect a particular trend length. Many people use 5, 17, 50. Six of one, half dozen of the other.

--Db
 
I use a 5 and 15 MA on a 3 minute chart. Since most day traders use a 5 minute chart, it gives me a little jump on things. Try it?
 
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