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Trading the Cable swings via averages

  • #1,361
  • Jan 25, 2019 7:07pm Jan 25, 2019 7:07pm
Quoting simon.says
{quote} Morning Alan! I am wondering if David was right? "EMA more reactive to PA so impulse bar pulls the average more steeply toward the target HH/LL?"
Well I was waiting for more people to have a crack and be a tad more specific.
  • #1,362
  • Jan 25, 2019 7:17pm Jan 25, 2019 7:17pm
Quoting Nala66
OK lets do a little test of all you guys to see if you understand the difference between and EMA and an SMA and how this affects what I term the impulse bar. Anyone like to take a stab at it.
The basic difference is that the EMA puts a greater weight on the most recent data points, whereas the simple moving average puts the same weight on each data point. So I am guessing that the EMA line will "move" faster (up or down) than the SMA on an impulse bar.
  • #1,363
  • Jan 25, 2019 8:37pm Jan 25, 2019 8:37pm
Quoting pakeha
{quote} The basic difference is that the EMA puts a greater weight on the most recent data points, whereas the simple moving average puts the same weight on each data point. So I am guessing that the EMA line will "move" faster (up or down) than the SMA on an impulse bar.
Yep fair enough you are saying the EMA is weighted on the last number and in our case using the 26 period that weight is 7.4% making the EMA a tad faster than the SMA.

That is the math of it but what does it tell us?
  • #1,364
  • Jan 25, 2019 9:06pm Jan 25, 2019 9:06pm
Hi Alan, I have concern on exact points for three entries from your previously posted chart.
Can you confirm on my below chart?
Thanks
Attached Image (click to enlarge)
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  • #1,365
  • Jan 25, 2019 9:55pm Jan 25, 2019 9:55pm
Quoting Nala66
On the charts below (2 x 5 min) We see on the left an orange box with an X in it. This would represent the last trade we were looking for. All the time this box is progressively moved upwards following or indeed leading the way for the EMA. However we expect this EMA to fail sooner or later so we are watching and waiting for the signals. Now look to the right hand chart and we see there two potential trades 1 and 2. For number 1 the orange box would have been lower and we would be looking for the short. Trade 1 gives us the go ahead with an RSI...
Hi Alan,
There is one thing I can't understand is this:
Quote
Trade 1 gives us the go ahead with an RSI Div but look what happens. The fast RSI pushes below the waterline but the slow one doesn't. This is a buy signal but I am short.
How do you define the slow RSI not touch waterline? Most of the time, on case of trade 1, if there were two or three down bars continuously would put slow RSI below waterline but when we were trading live how we could know for sure slow RSI wouldn't touch waterline and price would make HH?
  • #1,366
  • Jan 25, 2019 10:47pm Jan 25, 2019 10:47pm
Quoting Nala66
On the charts below (2 x 5 min) I have put an Aqua box on the RSI look at all those fast spikes below the waterline but the slow RSI remains above. All of these are long signals . {image}
You see that right there I never really recognised that, now looking back on charts and see them everywhere, is all the small things and the constant study.
life is a reflection of what we allow ourselves to see
  • #1,367
  • Edited 11:10pm Jan 25, 2019 10:50pm | Edited 11:10pm
Quoting Nala66
{quote} Yep fair enough you are saying the EMA is weighted on the last number and in our case using the 26 period that weight is 7.4% making the EMA a tad faster than the SMA. That is the math of it but what does it tell us?
moving average convergence and divergence? Given the 1 SMA is a proxy for price I am guessing it is basically price/ema convergence for the impulse bar and price/ema divergence on a corrective bar.
  • #1,368
  • Jan 26, 2019 2:06am Jan 26, 2019 2:06am
Quoting quangvision
{quote} Hi Alan, There is one thing I can't understand is this: {quote} How do you define the slow RSI not touch waterline? Most of the time, on case of trade 1, if there were two or three down bars continuously would put slow RSI below waterline but when we were trading live how we could know for sure slow RSI wouldn't touch waterline and price would make HH?
This is simple stuff.

With the RSI we are dealing with the closes. So if the slow closed below the waterline and the fast closed below the slow then you have not one but two indications the bulls are weak. Potentially.

I think you are trying to apply the same interpretation to two different situations here. In the text above the situation was different because the slow RSI was above the waterline and the fast was below. So this is a bullish interpretation because the bears cannot push the price across the EMA which is exactly the same as the RSI waterline. In other words the bears are oversold.
  • #1,369
  • Jan 26, 2019 2:48am Jan 26, 2019 2:48am
Quoting wilyno
Hello. I created a MT indicator to identify the divergence. Can help to test whether the indicator is detecting correctly? Thank you. {file}
Alan, could you help test whether the indicator is detecting all the divergences, i.e. regular, hidden and alan, correctly?
  • #1,370
  • Edited 5:02pm Jan 26, 2019 3:13am | Edited 5:02pm
Quoting pakeha
{quote} moving average convergence and divergence? Given the 1 SMA is a proxy for price I am guessing it is basically price/ema convergence for the impulse bar and price/ema divergence on a corrective bar.
I went through all this years ago trying to find a definitive reason for what was happening and I really got hot under the collar over it. Traders would say stuff like they are lagging and should be used in conjunction with something else and so on and so forth. Most traders like me stopped using them altogether because they tell us nothing of any value. Some used many MA's of different value to construct what is termed the Ribbon and would be looking for it twisting from bearish to bullish or bullish to bearish but even this twist was late.

Then something a kiwi (hi Kev) said a while back caused me to take a different look at these indicators. That caused me to take every thing else off the chart leaving me with the 5 min chart only showing the EMA. Now this all took quite some time But I found the 26 period was in effect the same as the RSI 50%.

Then sitting back and looking at this 5 min chart a light bulb switched on and a whole new way of looking began to emerge from the depths of my mucky mind.

I saw that when the EMA failed on one side it usually succeeded on the other to break the previous swing level.

In other words the use of the EMA as a tool had nothing whatsoever to do with price crossing or crisscrossing, I had been listening to the experts and I now know they were not wrong but completely off track.

Instead of comparing price to the average I should be comparing the average to the average.

From that moment on everything I had learned about trading just began to fall into place. I threw out the Fib, MACD, Bollinger Bands, Stochs, CCI and so on. They all became redundant as I cut back to the bare minimum. I began to see these average swings were places I was likely to see some resistance long or short, That being the case then I must also see something denoting support either long or short and what was already known to me slotted in perfectly.

So what trigger can I see that forms an indication of these swings? Well I had traded just divergences for an entire year so I knew a thing or two about those and bingo there was that problem solved. All I had to do was put all this into a tradeable package which turned out to be easy enough. Then I worked on the money management aspect to reap the benefit to the best of my advantage,

There were other discoveries over these years but I am giving the gist of the stuff here to keep it simple. By far the best was the fact that I was looking at the EMA all wrong and the formula for its calculation to try and speed up the information delivery was just a misleading slight of hand trick. All the calculation does it it marries the EMA up very nicely with the RSI 50%. There is nothing more than that to it.

The impulse bars are just where the masses have jumped in to make a few bob.
  • #1,371
  • Jan 26, 2019 5:34am Jan 26, 2019 5:34am
Brilliant Nala
  • #1,372
  • Jan 26, 2019 5:48am Jan 26, 2019 5:48am
Very grateful that you've generously shared your experiences and findings Alan.
  • #1,373
  • Jan 27, 2019 9:24am Jan 27, 2019 9:24am
Quoting quangvision
Hi Alan, I have concern on exact points for three entries from your previously posted chart. Can you confirm on my below chart? Thanks {image}
Hi Alan, can you please confirm these entries?
  • #1,374
  • Jan 27, 2019 5:26pm Jan 27, 2019 5:26pm
Quoting quangvision
{quote} Hi Alan, can you please confirm these entries?
Sorry I can't understand what the question is, What is the concern you have?
  • #1,375
  • Jan 27, 2019 6:10pm Jan 27, 2019 6:10pm
Quoting Bydyke
By way of reviewing today’s trade so far, here is my submission... So, we wait and see. The juicier pips might be ahead of us.

As the saying goes, everything works out from hindsight. Yes, the juicer pips manifested but on the upside.

At the time of my writing, Alan div on H1 was bullish and had aligned with that of H4 but who would have thought GU will fly 140 pips northwards, from there. From the moment PA could not push below H1 average at the 1400 GMT candle and the H1 average itself was beginning to curve upwards, the bulls promptly shredded that bearish H4 engulfer negating at least two M5 Alan divs in the process, to terminate at 3217.

Well for today and this week, I have read elsewhere about GU hitting 3300 and even 3600, But from our system, the bearish Alan div on H4, though not as long as the previous ones, tells us that GU will plummet first, most likely and must be overcome before further bullish moves.

So, for me, I won’t be surprised if GU downs to 3135 (H1 average) and then to 3041 (H4 average). One thing is sure, however, our system will guide us rightly.
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  • #1,376
  • Edited 6:38pm Jan 27, 2019 6:26pm | Edited 6:38pm
Shorted at 3200, SL 3218. Reason: commencement of M5 run off Alan div on M5. 2nd entry once the bear support appears

I know some persons frown at trading during the Asian session. However, I have found out that whenever GU opens with a gap, the Asian session produces respectable pips
Attached Image (click to enlarge)
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  • #1,377
  • Jan 27, 2019 7:59pm Jan 27, 2019 7:59pm
Quoting Bydyke
Shorted at 3200, SL 3218. Reason: commencement of M5 run off Alan div on M5. 2nd entry once the bear support appears I know some persons frown at trading during the Asian session. However, I have found out that whenever GU opens with a gap, the Asian session produces respectable pips {image}
If the Asian session is traded then we can expect a whole bunch of choppy signals.

One of the points of the method is to reduce the time spent at the PC trading.
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  • #1,378
  • Jan 27, 2019 8:10pm Jan 27, 2019 8:10pm
On the 1 hour chart it may simply be holding while the EMA attempts the HH.

P.S. I note Bydyke you don't have the EMA swing levels on your 1 hour chart so you are missing this vital piece of the analysis process.
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  • #1,379
  • Jan 27, 2019 8:12pm Jan 27, 2019 8:12pm
Quoting Nala66
{quote} If the Asian session is traded then we can expect a whole bunch of choppy signals. One of the points of the method is to reduce the time spent at the PC trading. {image}

I agree. I just woke up only to see that PA hasn't moved at all.

I have exited at 3193; will go back to sleep but will be ready for the London session.

From experience, we are likely to see this same scenario, this time with proper moves, at the London session
  • #1,380
  • Jan 27, 2019 8:23pm Jan 27, 2019 8:23pm
Quoting Nala66
On the 1 hour chart it may simply be holding while the EMA attempts the HH. P.S. I note Bydyke you don't have the EMA swing levels on your 1 hour chart so you are missing this vital piece of the analysis process. {image}
Alan that is the four hour chart does it matter? while Im asking should we be taking in consideration 4 hr or Daily at all?

I have just been working on 5 and 60 for direction and entry, if we are going to have a change of direction wont we see it first on the 1hr before the 4?
life is a reflection of what we allow ourselves to see
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