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Sick of all the MA crossover systems

  • #61
  • Jul 16, 2007 3:38pm Jul 16, 2007 3:38pm
Quoting recreator82
I agree with you on that jjrvat, sometimes they can give you a good entry in strong trends on retracements because they act as a dynamic trendline.
If i take a ma i can play with it's settings and fit it to any trend almost perfectly but in hindsight. In live trading you don't know if it's 55ema or 21 or 89wma so that's why i use trendlines to determine best entry for retracements.
I mostly trade futures not forex ... if you "trade" a market for a long time you can determine very good MA´s for each pair/contract. Whipsaws can kill you in very short timeframes in futures so thats why I prefer an "inefficient" confirmation with a MA price crossback in a strong trend.



In my opinion the only way for pure price action analysis (S/T) will be volumen analysis at DOM level, which is impossible in forex. In futures, stocks, etc is possible but i still can understand it ...



Nevertheless, I think your approach is by far better than most of the systems posted here… good luck!!!

jjrvat
  • #62
  • Jul 16, 2007 3:46pm Jul 16, 2007 3:46pm
Quoting feb2865
Markets are nothing more than a constant battle between supply and demand

As simple as it sounds to whoever understand this, will have the highest probability of success in all markets.


No matter what time frame you're using, there will be always a pivotal point in which the market turns, either a pullback or a reversal. That by itself is a warning sign that the supply or demand is exhausting.
Indicators are just past representation of price. I am not here to debate if they're good or bad, as to me is the interpretation of the trader where the problem lies. Indicators tends to mislead people into a predictive figure, in reality they're just "warning signs".Unfortunately, traders rely more into what the indicator says rather than price.

As to me, identifying support and resistance or I should say, shifts between demand and supply has a tremendous advantage, system wise over any indicator system. Instead of predictive, Support and Resistance puts you into a "reactive mode" meaning ...what would you do when the market reach x price?? will you buy/sell the breakout or will you buy/sell the bounce??

I prefer to be reactive than predictive. I play the market. Not only at the entry but S/R helps me spot minor/major shifts in the market as my trade develops. Sometimes I just bail out and pass and sometimes my trade takes some heat before reaching my target.

Make it simple - here's an idea

Let the market develop into a direction. There always will be a high/low for the day. Draw two lines, one at the top and one at the bottom (please not to be confused with picking tops and bottoms)

Once the market reach any of these points just ask yourself

will I buy the breakout??

or will I sell the bounce??

I assure you something ALWAYS happens at these points

develop your own criteria about validating either one, like I'll buy the breakout on the next bar if it breaks the higher/high - lower/low of the next bar...and take the trade as quick as possible

whatever happens next it's up to how do you manage your trade/stop-loss etc.

This has been my system since 1980 and I won't change it for nothing
hi feb, i would apreciate it if you could explain in more detail the strategy u are using, seems like you are a person who could teach us a lot.
  • #63
  • Jul 16, 2007 3:47pm Jul 16, 2007 3:47pm
Quoting jest1081
Just wondering, wasnt ma created to 'smooth' price action? i.e. reduce the so called noise?
Yep. In fact, MAs were taken straight from electrical engineering, where they are used to filter noise out of signals, yet virtually every trader doesn't realize this. In EE, low bandpass filters cut down information in the higher frequencies, where there is noise. The EMA was taken straight from an IIR (Infinite Impulse Response) low bandpass filter, and the SMA and WMA is taken straight from a FIR (Finite Impulse Response) low bandpass filter. If you don't believe me, search around these terms, and you'll find the formulas match to the MAs commonly used in trading. When I found out about this a couple of years ago, everything about MAs made a lot more sense.

But the problem with low bandpass filters is they inevitably LAG. Yes... this is even a problem in EE. However, the signal being processed is in the nanoseconds, and electrical engineers have developed formulas to calculate the time lag, so it isn't as much of a problem for them.
Quoting jest1081
While trading MA cross over is a sure no, but noting price movements in relation to the MA curves, could prove uselful. imho.
This is how banks, hedge funds, the big guys, whatever... use MAs. They often use the 50 and 200 period SMA or EMA on a daily or weekly timeframe, and when the price bars are above them, they buy the dips (determined by price action), and when the price bars are below them, they sell the rallies (also determined by PA)... simple as that.
  • #64
  • Jul 16, 2007 3:56pm Jul 16, 2007 3:56pm
Quoting bluebuddha

....
This is how banks, hedge funds, the big guys, whatever... use MAs. They often use the 50 and 200 period SMA or EMA on a daily or weekly timeframe, and when the price bars are above them, they buy the dips (determined by price action), and when the price bars are below them, they sell the rallies (also determined by PA)... simple as that.
Maybe in stocks, not sure about that for futures, and even worse in forex. I think fundamentals also play an important role for big guys ....

jjrvat
  • #65
  • Jul 16, 2007 3:59pm Jul 16, 2007 3:59pm
Quoting Craig
Are you not in fact, also on a soapbox?
This is only peoples opinions, it is after all a public forum.
Yes this is a forum with nice little sections for whatever you want to rant about, this should not be in the trading systems section in my opinion.

If dissing other peoples methods, indicators make you guys feel like better traders then go ahead I'm bored now.
  • #66
  • Jul 16, 2007 7:32pm Jul 16, 2007 7:32pm
Quoting lepiricus
You gave up your floating pivot system?
no.. i still use it for h1

i never search 100% profitable trades, its enough for me if i got $5000 in profit and $1300 in lost....
Simplicity your Life
  • #67
  • Jul 16, 2007 9:41pm Jul 16, 2007 9:41pm
Quoting bluebuddha
Yep. In fact, MAs were taken straight from electrical engineering, where they are used to filter noise out of signals, yet virtually every trader doesn't realize this. In EE, low bandpass filters cut down information in the higher frequencies, where there is noise. The EMA was taken straight from an IIR (Infinite Impulse Response) low bandpass filter, and the SMA and WMA is taken straight from a FIR (Finite Impulse Response) low bandpass filter. If you don't believe me, search around these terms, and you'll find the formulas match to the MAs commonly used in trading. When I found out about this a couple of years ago, everything about MAs made a lot more sense.

But the problem with low bandpass filters is they inevitably LAG. Yes... this is even a problem in EE. However, the signal being processed is in the nanoseconds, and electrical engineers have developed formulas to calculate the time lag, so it isn't as much of a problem for them.

This is how banks, hedge funds, the big guys, whatever... use MAs. They often use the 50 and 200 period SMA or EMA on a daily or weekly timeframe, and when the price bars are above them, they buy the dips (determined by price action), and when the price bars are below them, they sell the rallies (also determined by PA)... simple as that.
I think you are right. 50 and 200 are numbers which is very much used...not only in stocks, i think the basic fact that many used to dwell with these numbers that it becomes a natural transition for traders to use 50 and 200 in every other markets? PS: Not sharing a holy grail here, just sharing another fact that BB do use MA but in a simpler manner than most might think.
  • #68
  • Jul 17, 2007 8:31am Jul 17, 2007 8:31am
Quoting jest1081
I think you are right. 50 and 200 are numbers which is very much used...not only in stocks, i think the basic fact that many used to dwell with these numbers that it becomes a natural transition for traders to use 50 and 200 in every other markets?
Exactly. The 50 & 200 MAs might have originally been developed for stocks, but both the institutional traders and independent traders decided to use them in commodities and FOREX. This is also what happened with pivot points.

Pivot points were developed many years ago by commodity/futures floor traders, and more specifically in the US commodity markets. If you've ever seen a floor or been on a floor (I did a mock trading session on the floor of the CME a couple of years ago... quite an experience), the only data available to the pit traders is the last price and maybe the last five trades. That is it: no charts at all, the traders aren't allowed to have cell phones, PDAs, or even a cheap calculator on them. All they are equipped with is a stack of cards and a handful of pencils.

So how pivot points were invented was the floor traders came up with a formula based on yesterday's HLC to create sort of agreed on price levels to start paying attention. They would scribble these numbers down, somewhere on the stack of cards, and head to the floor. When pivot points hit the Internet several years ago, traders started using them for any type of market, even though there was no basis as to why they should be using them in other markets.
  • #69
  • Last Post: Jul 17, 2007 8:42am Jul 17, 2007 8:42am
Since then, like anything, the more popular they got the less effective they have become.
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