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Sick of all the MA crossover systems

  • #21
  • Jul 15, 2007 3:52pm Jul 15, 2007 3:52pm
Quoting recreator82
I'm glad i started this thread.
To all those who love ma crossover systems:

Do you think banks and large hedge funds trade when ema 5 crosses ema 10?
I don't think they exactly trade such crossover.
Let's try asking a valuable member

Where are you, Rusty?
  • #22
  • Jul 15, 2007 3:54pm Jul 15, 2007 3:54pm
Maybe i'm wrong about ma crossovers, i just found a perfect system that never fails.
Plot 1000 ema (red) and 2000 ema (blue) on a daily chart (works on smaller time frames too). Buy when ema 1000 crosses ema 2000 from below and sell when it crosses from above. The system still needs some adjustments for sl and tp.
  • #23
  • Jul 15, 2007 3:55pm Jul 15, 2007 3:55pm
Quoting Craig
Best quote ever!
A quote you should always remember while trading!
  • #24
  • Jul 15, 2007 4:04pm Jul 15, 2007 4:04pm
Quoting Sidus
Moving average crossovers suck!
LOL, Sidus, you sound like you are 100% sure

Now, if someone is 100% sure (it's of course only given a presumption you are sure), there must be some 100% un-objectible proof

It reminds me when I first heard of Fermat's Last Theorem.

Altough theorem was stated by Pierre de Fermat at around year 1630, it took literaly ages for mathematicians to prove the statement is correct. As far as I remember it has only been proved in year 1995.

You know what the bottomline is

Reference Link: http://en.wikipedia.org/wiki/Fermat_last_theorem if someone cares
  • #25
  • Jul 15, 2007 7:48pm Jul 15, 2007 7:48pm
I couldn't help but jump in on this one. (And I am sure I will be sorry I did.)

Moving averages are the plotted version of the average of a certain amount of candles in the past. Great. Personally, that says volumes to me. (As I am more inclined to worry about where price is heading, not where it used to be.) I don't understand why the fact that the shorter time framed one is now crossing over (reading the same) as the longer one, thats a bullish signal. That simply means that the (example) last 13 candle's average is 122.00, while the last 40 candles average is 122.00. This doesn't mean much. I can make any two EMA's look good. And as an experiment, try any two or three random numbers, plot them on a chart as MA's, and I guarantee it will produce a signal at one point or another. And that signal would have made pips. Period.

Now, I suppose some use a MA as a trend direction.....as in the 200 or whatever, and that's fine. But truthfully, I can look at a chart and tell if price has been going up or down. It's not that hard really. As Jacko says, a 5 year-old can do it.

Truthfully, a candle slicing through a trendline or better yet a triangle on the 4 hr chart excites me a whole lot more. Plus, the more lines you put on the chart, the less likely you are to make a trade......Paralysis by Analysis.

With proper money management, and looking for support and resistance, you can come out ahead.....

I personally have used some of those systems, and have found the MA's a crutch is all. A clean chart helps you see the forrest through the trees.

Plus, always remember this: Those indicators most people use? They were made for the stock market, which behaves differently. We are the young pioneers in this market, as it hasn't been publicly traded all that long. In American historical context, we are at roughly Missouri, with a long way to go to reach the Pacific! ;-)
  • #26
  • Jul 15, 2007 7:52pm Jul 15, 2007 7:52pm
Quoting StockKJay
Craig, I will not argue. But please, say "in your opinion" from the start. Just because you do not like something does not mean they are useless, that goes for indicators as well. I use W%R and a couple MAs.

Contest thread: http://www.forexfactory.com/showthread.php?t=13391

Contest results: http://www.forexfactory.com/showpost...&postcount=131

Both myself and Aicccia ran away with the contest, Aicccia obviously owned everyone. I wont speak for Aicccia, though he does use MAs and I do as well. Is there discretion, of course! Do we trade just on a crossover, no. But MAs certainly help me and from viewing Aicccias method, they help him as well.


I think your friend's post (Aicccia, who is asking why these systems don't work.) probably says more than I ever could.

http://forexfactory.com/showthread.php?t=17340
  • #27
  • Jul 15, 2007 8:55pm Jul 15, 2007 8:55pm
Quoting clockwork71
I think your friend's post (Aicccia, who is asking why these systems don't work.) probably says more than I ever could.

http://forexfactory.com/showthread.php?t=17340
That thread he started was an attempt to find opinions I suppose? This is the system he told me he used during that contest.

http://forexfactory.com/showthread.php?t=17588

I will never debate about a mechanical crossover system. They simply will not work. In this way I agree 100% with the thread starter. What I disagree with are the folks that will just resort to saying indicators/MAs are pointless and of no use. Many people find a lot of use in them. I personally don't get pivot points and Fib lines. Where is the purpose in placing an order simply because price goes above and closes above a certain point? It already went up ... now is the best time to get in? It is a matter of preference. I don't go around flaming pivot threads though, however, it seems like there are new MA bashing threads starting every month around here. I think the biggest reasoning behind this is people initially see an MA system and they think it is a "holy grail", only to later find out that they will lose 50% or more of their trades.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #28
  • Jul 15, 2007 9:22pm Jul 15, 2007 9:22pm
To me, not using discretion is a big loss to trader.
Discretion is a product of human intelligence. Intelligence is a gift of God to human (cows and computers dont have intelligence, dont they ?) It's a waste if a trader does not train his mind to make discretionary decision.

In my opinion, almost all system can produce great profit when you add your own discretion into it.

Discretion is king.

It's sad when people keep looking for a completely 100% working mechanical system because they want to make profit without thinking. The right path to become a successful trader is to develop the capacity to make discretionary decision. Maybe there are 100% mechanical systems that work, but dont put too much hope that you'll find them.

That's why experts advise newbies to trade only 1-2 pairs at one time. It's easier to develop the gut-feel for the market that way. But hell no, most newbies are too stubborn to take that advice. They think "if I can make 5 for one pair, if I trade 20 pairs it will be 100 pips a day, Ferrari here I come". A week later, newbies burned all their money.
  • #29
  • Jul 16, 2007 1:18am Jul 16, 2007 1:18am
Quoting luqmanz
To me, not using discretion is a big loss to trader.
Discretion is a product of human intelligence. Intelligence is a gift of God to human (cows and computers dont have intelligence, dont they ?) It's a waste if a trader does not train his mind to make discretionary decision.

In my opinion, almost all system can produce great profit when you add your own discretion into it.

Discretion is king.

It's sad when people keep looking for a completely 100% working mechanical system because they want to make profit without thinking. The right path to become a successful trader is to develop the capacity to make discretionary decision. Maybe there are 100% mechanical systems that work, but dont put too much hope that you'll find them.

That's why experts advise newbies to trade only 1-2 pairs at one time. It's easier to develop the gut-feel for the market that way. But hell no, most newbies are too stubborn to take that advice. They think "if I can make 5 for one pair, if I trade 20 pairs it will be 100 pips a day, Ferrari here I come". A week later, newbies burned all their money.
Nice post! Completely agree with this one
  • #30
  • Jul 16, 2007 1:37am Jul 16, 2007 1:37am
Why using support/resistance is better than ma crossover?

Everybody can see on their charts a double top but not everybody has the ema/wma/sma on their charts and those who have don't use the same settings.
  • #31
  • Jul 16, 2007 2:04am Jul 16, 2007 2:04am
Quoting luqmanz
It's sad when people keep looking for a completely 100% working mechanical system because they want to make profit without thinking.
Proper mechanical systems require a tremendous amount of thought and analysis, I fail to see what is sad about that, any incites gained will be valuable for any type of trading. The art of proper analysis is sadly rare, people want to reduce such things to easy formulas (e.g. MAs), so the above argument works both ways. The only sad thing that I can see is that people keep trying the same thing over and over expecting a different outcome.
The breaking of a wave cannot explain the whole sea.
  • #32
  • Jul 16, 2007 2:41am Jul 16, 2007 2:41am
Fact : Traders trade to make money and thats all there is to it...
Fact : Analysis is a whole load of BS...just watch the tv and you'll get what i mean.

Fact : MAs are useful for blind people like me who dont really understand the word trend...so 50 and 200 is a useful addition.

While the trend is really a good friend, i really don't give a heck abt it.
  • #33
  • Jul 16, 2007 2:42am Jul 16, 2007 2:42am
Your point being?
The breaking of a wave cannot explain the whole sea.
  • #34
  • Jul 16, 2007 2:49am Jul 16, 2007 2:49am
In general, I think price tells the tale. With that said, like everything...indicators, MA's, etc have their place if someone wants to find use with them. As with anything, they can be extremely effective if you know when to use them. Just purely following a trend following MA system or purely following a RSI or Stoch oscillator all the time will never really work out. If you know when to use each one, they can be very helpful. And yes, there are ways to know when to use each one. What is even more interesting, is to study the instances in which indicators don't work...
  • #35
  • Jul 16, 2007 2:50am Jul 16, 2007 2:50am
Simply just pull a trade and manage it accordingly, you always a have a 50% chance of winning/losing no matter how powerful ur system is or whatever its winning ratio is....every single second a certain person gets a trigger to their 'system'. I wonder where the smart money really is or is there really any...its proly just profits and loss.
  • #36
  • Jul 16, 2007 3:11am Jul 16, 2007 3:11am
I agree with you

In long run majority of MA based systems fail to work out

Trader need a system which:

1. Is easy to use (no confusion, like 4Hour charts indicate long, while 1Hour charts indicate short)
2. Diversified. If system fails on one pair it will work on another
3. System must say "I do not work anymore, update me" this must occure before you lose 10% of you acc.

MA systems usually do not meet these requirements

thanks
kiss the trend
  • #37
  • Jul 16, 2007 3:35am Jul 16, 2007 3:35am
To say that MA systems don't work is like saying the strearing wheel on a car doesn't work. Your stearing wheel doesn't tell you which way to stear, nor does it tell you when to apply the throttle or the brake. The 'nut' behind the wheel does all that.

MAs do work. What they don't do is tell you what you should do - which is what most newbie traders seem to want. That decision is up to the trader. MAs will only let you know what sort of market you are in and at what level the price might find support.

MAs are in indicator. As with any indicator, they indicate what the market has done and is doing but not what it will do. No one can accurately predict the future. The best you can get is what is likely to happen barring any major upset.

This is where strong position management is needed along with total risk management.
Follow the money. Follow the money. Follow the money.
  • #38
  • Jul 16, 2007 3:37am Jul 16, 2007 3:37am
Quoting Craig
Proper mechanical systems require a tremendous amount of thought and analysis, I fail to see what is sad about that, any incites gained will be valuable for any type of trading. The art of proper analysis is sadly rare, people want to reduce such things to easy formulas (e.g. MAs), so the above argument works both ways. The only sad thing that I can see is that people keep trying the same thing over and over expecting a different outcome.
I agree with most of your points. However anyone developing/using any mechanical system need to be wary of over-analysis and the tendencies of curve-fitting.

I remember what one of the traders in Market Wizards said
1) Follow the rules.
2) Know when to break the rules.

You can never do #2 without first developing your gut-feel. For newbies, there's only one way to develop that; trade only 1-2 pairs at one time.

Anyone familiar with Soros "reflexivity" theory? To me, trying to develop a 100% mechanical system is a sign of traders trying to treat the market like it's a branch of natural science.
  • #39
  • Jul 16, 2007 4:16am Jul 16, 2007 4:16am
Just wondering, wasnt ma created to 'smooth' price action? i.e. reduce the so called noise? While trading MA cross over is a sure no, but noting price movements in relation to the MA curves, could prove uselful. imho.
  • #40
  • Jul 16, 2007 4:31am Jul 16, 2007 4:31am
Quoting luqmanz
However anyone developing/using any mechanical system need to be wary of over-analysis and the tendencies of
Indeed, this is a major pitfall for certain types of automated systems.
I think the major mistake most people seem to make in automated systems is they try to make computers trade like a human would, this is a mistake as it is like trying to teach a computer to paint. Once you move away from constraining your thinking around what a human would or would not do, then new opportunities start to open up, by constraining automation to indicator based systems you are playing to the weaknesses, not the strengths of the computer. Actually, in general, getting beyond indicators forces your thinking in completely new directions, which in my opinion is good. Anyway, getting off topic...
The breaking of a wave cannot explain the whole sea.
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