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  • Post #1
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  • First Post: May 27, 2005 6:19am May 27, 2005 6:19am
I had a bit of a look at the daily charts for the GBP/JPY cross. It seem like there is some potential for profit. I have no idea how future developments with the Yuan would effect this but here goes. On the daily chart over the past year the MA3/MA10 crossover seems to signal good opportunities for going long (maybe a bit more favourable because of the interest rate differences) or short. Just using the MA3/MA10 crossover does not constitute a trading system. I would really appreciate it if anybody would like to make suggestions.
-What other indicators could be use to confirm a signal or to filter out false ones.
-What type of Stop Loss should one use on a trade like this? (180 pips below MA10?)
-Maybe trailing the Stop Loss 180 pips below the MA10 once the market start a favourable move?
-It seems like a good idea to Exit the trade when the next MA3/MA10 crossover takes place after the market moved some distance…
-What type of MM is used when trading over a longer period? Would you use 2% risk per trade?
Thank you very much for taking the time to look at this and help me out with suggestions.
Quoting RooiValk
I had a bit of a look at the daily charts for the GBP/JPY cross. It seem like there is some potential for profit. I have no idea how future developments with the Yuan would effect this but here goes. On the daily chart over the past year the MA3/MA10 crossover seems to signal good opportunities for going long (maybe a bit more favourable because of the interest rate differences) or short. Just using the MA3/MA10 crossover does not constitute a trading system. I would really appreciate it if anybody would like to make suggestions.
-What other indicators could be use to confirm a signal or to filter out false ones.
-What type of Stop Loss should one use on a trade like this? (180 pips below MA10?)
-Maybe trailing the Stop Loss 180 pips below the MA10 once the market start a favourable move?
-It seems like a good idea to Exit the trade when the next MA3/MA10 crossover takes place after the market moved some distance…
-What type of MM is used when trading over a longer period? Would you use 2% risk per trade?
Thank you very much for taking the time to look at this and help me out with suggestions.
i like what i see rooi, and i have a suggestion. if you are using the MA 3/10 for your crossover, you may want to make your stop a bit smaller. the MA 3/10 on daily bars will signal a more short term move (move lasting under a week) that may only need 100 or so pip stop. i always try to make my profit target 3 times as big as my stop, and a 300 pip profit target is more reasonable than a 540 pips stoploss (180x3). hope this helps, and good luck with your system.
Relax and be happy.
  • Post #3
  • Quote
  • Edited 8:21pm May 28, 2005 8:16pm | Edited 8:21pm
Quoting RooiValk
I had a bit of a look at the daily charts for the GBP/JPY cross. It seem like there is some potential for profit. I have no idea how future developments with the Yuan would effect this but here goes. On the daily chart over the past year the MA3/MA10 crossover seems to signal good opportunities for going long (maybe a bit more favourable because of the interest rate differences) or short. Just using the MA3/MA10 crossover does not constitute a trading system. I would really appreciate it if anybody would like to make suggestions.
-What other indicators could be use to confirm a signal or to filter out false ones.
-What type of Stop Loss should one use on a trade like this? (180 pips below MA10?)
-Maybe trailing the Stop Loss 180 pips below the MA10 once the market start a favourable move?
-It seems like a good idea to Exit the trade when the next MA3/MA10 crossover takes place after the market moved some distance…
-What type of MM is used when trading over a longer period? Would you use 2% risk per trade?
Thank you very much for taking the time to look at this and help me out with suggestions.
i am watching this also, here is my take. be careful as price has dropped below the 365 ma. also on a 4hr chart it has now dropped below the 1,3 and 5 year ma. on a 1hr chart it is now under a 1,3,5 and the 10 yr ma. i think it could go higher but i am setting up for a big drop to the downside when the time is right. of course i could be wrong which would not be the first time. here is what i think is going to happen. if we see a stall under the 365 on the daily chart look for a move to around low 190's. if it does not i think you will see a climb to around 198 to 200 then i really think you are going to see a move down. this is the area i am waiting for to go short on a long term trade. jim
Quoting merlin
i like what i see rooi, and i have a suggestion. if you are using the MA 3/10 for your crossover, you may want to make your stop a bit smaller. the MA 3/10 on daily bars will signal a more short term move (move lasting under a week) that may only need 100 or so pip stop. i always try to make my profit target 3 times as big as my stop, and a 300 pip profit target is more reasonable than a 540 pips stoploss (180x3). hope this helps, and good luck with your system.
Thanks a lot for the advice, Merlin. I will have another look at the charts.
Quoting james16
i am watching this also, here is my take. be careful as price has dropped below the 365 ma. also on a 4hr chart it has now dropped below the 1,3 and 5 year ma. on a 1hr chart it is now under a 1,3,5 and the 10 yr ma. i think it could go higher but i am setting up for a big drop to the downside when the time is right. of course i could be wrong which would not be the first time. here is what i think is going to happen. if we see a stall under the 365 on the daily chart look for a move to around low 190's. if it does not i think you will see a climb to around 198 to 200 then i really think you are going to see a move down. this is the area i am waiting for to go short on a long term trade. jim
Thanks for working up a number of possibilities with me. Just a question…what charting software do you use?
Quoting merlin
i like what i see rooi, and i have a suggestion. if you are using the MA 3/10 for your crossover, you may want to make your stop a bit smaller. the MA 3/10 on daily bars will signal a more short term move (move lasting under a week) that may only need 100 or so pip stop. i always try to make my profit target 3 times as big as my stop, and a 300 pip profit target is more reasonable than a 540 pips stoploss (180x3). hope this helps, and good luck with your system.
Hi Merlin,

Here is one thing that I have never been able to fully understand: what is the point of moving average x-overs? They get you into a trade way too late, they are not invariant to the choice of units, they just smooth the price which you can just see by eyeballing the charts. I understand that some good traders use MA x-overs, but I find it pretty confusing why anyone would want to use a lagging indicator which adds nothing to the price series and varies according to the time frame one uses. Can you be kind enough to explain? I really would like to know because I don't like using indicators the logic of which I don't understand.
Quoting davide123
Hi Merlin,

Here is one thing that I have never been able to fully understand: what is the point of moving average x-overs? They get you into a trade way too late, they are not invariant to the choice of units, they just smooth the price which you can just see by eyeballing the charts. I understand that some good traders use MA x-overs, but I find it pretty confusing why anyone would want to use a lagging indicator which adds nothing to the price series and varies according to the time frame one uses. Can you be kind enough to explain? I really would like to know because I don't like using indicators the logic of which I don't understand.
well i guess the "point" is to make money i assume there are people out there trading MA crossovers successfully. i personally have never found a MA crossover that works well so you wont find them in my portfolio either.
Relax and be happy.
Quoting merlin
well i guess the "point" is to make money i assume there are people out there trading MA crossovers successfully. i personally have never found a MA crossover that works well so you wont find them in my portfolio either.
Thanks Merlin. Some 'Market Wizards' use MAs so who am I to argue?
Quoting merlin
well i guess the "point" is to make money i assume there are people out there trading MA crossovers successfully. i personally have never found a MA crossover that works well so you wont find them in my portfolio either.
Merlin, you constantly challenge my thinking. That's a good thing, so thanks!

My understanding at this point is that MA crossovers will make money over time when coupled with good money management. I further understand they are hard to trade because of severe drawdowns. As to their profitability I've seen about an equal number of people say they will give a small return as those who say they give a good return. I don't know which is true, or under what circumstances.

So here's my question for you Merlin. If you don't have MA crossovers in your portfolio, then what type systems do you have in it?

What I would like to know, O Great Wizard, is your view as to what type of systems to trade, and in what combination.

Thanks in advance for revealing ALL your trading secrets in your next reply
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Quoting diallist
Merlin, you constantly challenge my thinking. That's a good thing, so thanks!

So here's my question for you Merlin. If you don't have MA crossovers in your portfolio, then what type systems do you have in it?

What I would like to know, O Great Wizard, is your view as to what type of systems to trade, and in what combination.

Thanks in advance for revealing ALL your trading secrets in your next reply
I just wanted to share my 2 cents on this subject. Crossovers can work but they break over time (you have to keep fudging with the numbers). But PLEASE take a look at using moving averages as levels of support and resistance. What I mean is that moving averages are dynamic levels of support and resistance. Look at some of the following MAs on the following charts:

Time frames: Weekly, Daily, 4hr, 1hr, 15min
Simple and/or Exponential MAs: 200, 100, 50, 30

And so many more. It is stunning how reliable they are.

Rob Booker
Quoting robbooker
I just wanted to share my 2 cents on this subject. Crossovers can work but they break over time (you have to keep fudging with the numbers). But PLEASE take a look at using moving averages as levels of support and resistance. What I mean is that moving averages are dynamic levels of support and resistance. Look at some of the following MAs on the following charts:

Time frames: Weekly, Daily, 4hr, 1hr, 15min
Simple and/or Exponential MAs: 200, 100, 50, 30

And so many more. It is stunning how reliable they are.

Rob Booker
stunning is the correct word. pull up a daily, 4hr or 1hr chart, then put a 1,3 or 5 year ma on the chart. look for a good run by price going up or down thru one of these ma's. take a look how often price will come back and touch one of these ma's then turn as if on cue. you can combine fib ret with these ma's and you will have a sound and profitable trading strategy. this is the way i trade, combined with a couple of entry techniques. trading like this has made me a lot of money, and i would bet it has rob too. when price returns to them and its close to fib levels its the closest thing to a sure profit you are going to find. the other great thing about it is you have a sound and logical place to put your stop. if price penetrates the ma and a large fib level you know that the trade is probably not going to work. set up a chart and take a look, i guaruntee in about 3 minutes your heart will be racing. great post rob, i would bet a steak dinner you are a succesful trader. jim
Quoting robbooker
I just wanted to share my 2 cents on this subject. Crossovers can work but they break over time (you have to keep fudging with the numbers). But PLEASE take a look at using moving averages as levels of support and resistance. What I mean is that moving averages are dynamic levels of support and resistance. Look at some of the following MAs on the following charts:

Time frames: Weekly, Daily, 4hr, 1hr, 15min
Simple and/or Exponential MAs: 200, 100, 50, 30

And so many more. It is stunning how reliable they are.

Rob Booker
I think this makes a lot of sense. But moving average x-overs as entries are, in my opinion, about the worst indicators to use. Some of these cross overs get you in a trade so late that stop loss levels can become a complete nightmare. I will check out the levels you suggested. Thanks mate.
Quoting davide123
I think this makes a lot of sense. But moving average x-overs as entries are, in my opinion, about the worst indicators to use. Some of these cross overs get you in a trade so late that stop loss levels can become a complete nightmare. I will check out the levels you suggested. Thanks mate.
hello david, hope all is well with you. i am sure you do, but i want to make sure you understand rob is not talking about a moving average cross. he is talking about one ma acting as sole support or resistance in relation to price.
Quoting james16
hello david, hope all is well with you. i am sure you do, but i want to make sure you understand rob is not talking about a moving average cross. he is talking about one ma acting as sole support or resistance in relation to price.
Great discussion! Tell me Jim, what software do you use for your charts.
Quoting james16
i am watching this also, here is my take. be careful as price has dropped below the 365 ma. also on a 4hr chart it has now dropped below the 1,3 and 5 year ma. on a 1hr chart it is now under a 1,3,5 and the 10 yr ma. i think it could go higher but i am setting up for a big drop to the downside when the time is right. of course i could be wrong which would not be the first time. here is what i think is going to happen. if we see a stall under the 365 on the daily chart look for a move to around low 190's. if it does not i think you will see a climb to around 198 to 200 then i really think you are going to see a move down. this is the area i am waiting for to go short on a long term trade. jim
well i got in when it bounced off of the 365 at 197.33. sold half at 194.50, still holding the other half at breakeven. i still think the bottom could drop out, but if i am wrong i still have a profit. pay attention to where price is in relation to this ma. it can make you money but more importantly it can keep you out of bad trades.
Quoting james16
well i got in when it bounced off of the 365 at 197.33. sold half at 194.50, still holding the other half at breakeven. i still think the bottom could drop out, but if i am wrong i still have a profit. pay attention to where price is in relation to this ma. it can make you money but more importantly it can keep you out of bad trades.
That is great! Tell me... what software do you use for your charts?
Quoting james16
well i got in when it bounced off of the 365 at 197.33. sold half at 194.50, still holding the other half at breakeven. i still think the bottom could drop out, but if i am wrong i still have a profit. pay attention to where price is in relation to this ma. it can make you money but more importantly it can keep you out of bad trades.
Did you get in after a retracement to 23.6 this time? I thought you usually get in at 38.2 or sometimes at 50.
Steven
Quoting RooiValk
That is great! Tell me... what software do you use for your charts?
i am currently using tradestation.
  • Post #19
  • Quote
  • Edited 2:47pm Jun 10, 2005 2:33pm | Edited 2:47pm
Quoting scpeter
Did you get in after a retracement to 23.6 this time? I thought you usually get in at 38.2 or sometimes at 50.
this trade was based on the following. this is just a trade set up i have noticed after years of staring at charts. notice that on a 60 minute chart when price breaks thru and makes a good run that when it comes back to the 365 THE FIRST TIME it sometimes bounces off almost on cue. now this means nothing if you cant figure out when sometimes means probably. i have found that it probably will when the daily chart has made a move past the 365 in the same direction. take a look, on the daily price moved under the 365 so when it did i switched over to my 60 min to watch for the first ret back to the 365. now you can play just off of the daily but i can pinpoint and use a smaller stop by switching to the 60. price on this currency is headed back up as we speak but i still think there is a good chance it may stall and turn between 198 and 200. one of the most important things you have to learn as a trader is price action. i dont use candles, thats not how i learned years ago. do you know the difference between bullish, bearish and neutral price action. if you dont you need to learn. let me give you an example. i use bar charts. look at the last swing high on this currency on the daily chart. it will be the two top bars, 4/20 and 4/21. this is a double bar high with a lower close on the second bar. a dead giveaway it was going down. this is bearish price action. combine this with the fact that it was testing historical highs on this time frame and there is the kind of trade the 5 percent look for. does it work every time, no, but its better than guessing. jim
Quoting james16
this trade was based on the following. this is just a trade set up i have noticed after years of staring at charts. notice that on a 60 minute chart when price breaks thru and makes a good run that when it comes back to the 365 THE FIRST TIME it sometimes bounces off almost on cue. now this means nothing if you cant figure out when sometimes means probably. i have found that it probably will when the daily chart has made a move past the 365 in the same direction. take a look, on the daily price moved under the 365 so when it did i switched over to my 60 min to watch for the first ret back to the 365. now you can play just off of the daily but i can pinpoint and use a smaller stop by switching to the 60. price on this currency is headed back up as we speak but i still think there is a good chance it may stall and turn between 198 and 200. one of the most important things you have to learn as a trader is price action. i dont use candles, thats not how i learned years ago. do you know the difference between bullish, bearish and neutral price action. if you dont you need to learn. let me give you an example. i use bar charts. look at the last swing high on this currency on the daily chart. it will be the two top bars, 4/20 and 4/21. this is a double bar high with a lower close on the second bar. a dead giveaway it was going down. this is bearish price action. combine this with the fact that it was testing historical highs on this time frame and there is the kind of trade the 5 percent look for. does it work every time, no, but its better than guessing. jim
Thanks James, I will digest your information. Thanks again for your explanations and thanks for your time.
Steven
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