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Why exactly do EMA crossover systems not work?

  • #121
  • Jul 12, 2011 3:05pm Jul 12, 2011 3:05pm
Quoting Turveyd
to me a leading indicator, would take the lead ie go first then the market would follow, it's misleading and incorrect.
what a joke. are you merriam webster? i guess you expect it to print you a map to buried treasure and also give you tomorrows lottery numbers as well?

you just don't understand much do you? a leading indicator CAN lead and then price CAN follow, but it doesn't HAVE to follow... because the indicator is, and here's the big surprise, only indicating something. garbage in, garbage out. if you don't know what you are reading from an indicator then you can't expect to gain any insight from it's values.

does the weather for today behave the way it does because of what the weather man predicted last night? get a grip.
Congratulations ScalaFX for coming out of the closet!
  • #122
  • Jul 12, 2011 3:34pm Jul 12, 2011 3:34pm
Quoting nubcake
what a joke. are you merriam webster? i guess you expect it to print you a map to buried treasure and also give you tomorrows lottery numbers as well?

you just don't understand much do you? a leading indicator CAN lead and then price CAN follow, but it doesn't HAVE to follow... because the indicator is, and here's the big surprise, only indicating something. garbage in, garbage out. if you don't know what you are reading from an indicator then you can't expect to gain any insight from it's values.

does the weather for today behave the way...
I'd be happy with the map, but prefer the lottery numbers, although I'd have to find someone I trust to put them on cause I refuse to take part in the stupid persons tax.

So your saying it can lead, cause basically it doesn't really work so sometimes get lucky, hardly leading is it, it's just crap and getting lucky from time to time.

I don't use / like indicators, price and a few MA's works for me.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #123
  • Edited Jul 13, 2011 3:05am Jul 12, 2011 11:28pm | Edited Jul 13, 2011 3:05am
Quoting nubcake
what a joke. are you merriam webster? i guess you expect it to print you a map to buried treasure and also give you tomorrows lottery numbers as well?

... if you don't know what you are reading from an indicator then you can't expect to gain any insight from it's values. ....get a grip.
dude, you crack me up.

Quoting Turveyd
to me a leading indicator, would take the lead ie go first then the market would follow, it's misleading and incorrect.
to show I'm not cherry picking some perfect example, here's my current EU 1M scalping chart)

the RSX is signaling a potential reversal 4 minutes prior to the top.

Everyone's entitled to their opinion whether indicators can lead or not.

I'm more concerned with fact.
Attached Image (click to enlarge)
Click to Enlarge Name: 1m.jpg Size: 144 KB
  • #124
  • Jul 13, 2011 2:30am Jul 13, 2011 2:30am
Quoting nubcake
a set of stop lights is a leading indicator when most people consider it to be a lagging indicator. you see the light go red so you stop, or it goes green and so you go... clearly this would seem to be a lagging indicator, and used this way it IS a lagging indicator. you see something, and then you react to that something that just occurred.

but you can use a set of stoplights as a leading indicator as well with just a little bit of thinking from an altered perspective. when the light goes red you can presume that traffic ahead of you and behind...
Now that's a professional trader's mentally.
Let me add/edit a few things if you don't mind.

Nubcake:
"a set of stop lights is a leading indicator when most people consider it to be a lagging indicator. you see the light go red so you stop, or it goes green and so you go... clearly this would seem to be a lagging indicator, and used this way it IS a lagging indicator. you see something, and then you react to that something that just occurred.

but you can use a set of stoplights as a leading indicator as well with just a little bit of thinking from an altered perspective.when the light goes red you can presume that traffic ahead of you and behind you will stop and cars from a different direction will begin to move... it doesn't indicate which set of traffic will begin to flow, it merely suggests that a different lane will begin to flow. most of the time this holds true, but then you get times when someone has triggered a pedestrian crossing and so in this instance no traffic flows and some douche strolls across the road with their ipod in their ears and their thumb up their butt. nothing is ever set in stone.

when the light in your lane goes green you can presume that traffic in your lane is again going to move. this doesn't take into account a broken down vehicle in front of you though, so it's not a certainty, it's just a likely possibility. a green light in your lane also suggests to you that other traffic that would otherwise crash into you will now stop and let you proceed, but this doesn't mean some drunk idiot won't run their red light and t-bone your car.

(This is what it means about trade management and having a dynamic exit. If you understand this concept you will understand that "buy/sell here" and "exit here" according to your indicator is a futile concept. We live in a world of limitless potential; anything can happen. Taking every buy,sell and exit according to your indicators is like believing that a "high paying job will make you rich", "getting an education will make you a success", "exercising will lose weight" Although these statements hold truth, not all who takes it literally will make it work. etc... etc... Yet 95% of people will take trading in a rigid manner... well it's not a surprise that people also take the same approach with their life... no wonder why not a lot of people live an abundant life... they are not adaptive, versatile and flexible enough.) -- CrucialPoint

do you specifically trade particular times of the day and not others? if you do, and it's not simply due to being awake at those times, then it's likely that you trade these particular times due to knowing the price is more likely to move during these times and not during other times. it's not predicting the price values, it's only assuming a potential of price getting somewhere and not idling. looking at a few days worth of hourly charts would generally reveal when it's worth trading and when it's not, so in this case you can consider the hourly chart in it's own right to be a leading indicator of momentum when you regard it in a manner other than simply price equaling some value at some time. looking at an hourly chart and getting an idea of when price shows momentum doesn't guarantee movement or knowing future prices, it simply suggests a more likely potential of movement instead of likely idling." (There are a statistical edge between boundaries and that's the reason why I highlighted "a more likely potential". Anyone can throw me all their excellent math and probabilities which will show an equilibrium and an objective result proving that there are no statistical edge... the math is right, but the research was flawed... and No, I'm not going to show the statistical edge it's the most common flaw when dealing with statistics)
  • #125
  • Jul 13, 2011 3:07am Jul 13, 2011 3:07am
Quoting CrucialPoint
Let me add/edit a few things if you don't mind.
you can, have, and should. i hate you only because you made it better than i ever could have, lol
Congratulations ScalaFX for coming out of the closet!
  • #126
  • Jul 13, 2011 3:35am Jul 13, 2011 3:35am
Quoting aicccia
Is it because ema's inherently lag and this kills them in ranging markets?
Trading systems solely based on EMA crossover will definitely get raped in ranging market.

But EMA systems can work if supported by enough additional filters or composed by many EMAs that together form a systematical framework in order to maximize gains and minimize losses. EMAs are good in trending market, so it basically needs some filters to stop itself from trading in ranging market.

Cheers.
The tone of your words reflects the quality and result of your trading ;-)
  • #127
  • Jul 13, 2011 5:50am Jul 13, 2011 5:50am
Any indicator that derives its formula from current & past price cannot be a leading indicator.

This what you guys are discussing?
  • #128
  • Jul 13, 2011 5:53am Jul 13, 2011 5:53am
Quoting EmeraldEyes
Any indicator that derives its formula from current & past price cannot be a leading indicator.

This what you guys are discussing?

You need a indicator which taps into the physic hotline for that


Careful your anger Nub, then he'll say cruel things about you!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #129
  • Jul 13, 2011 5:59am Jul 13, 2011 5:59am
Quoting EmeraldEyes
Any indicator that derives its formula from current & past price cannot be a leading indicator.

This what you guys are discussing?
Mate, that was covered off early on.

Anyway, I said my piece earlier so have nothing to add.

People are entitled to their opinions. All I care about is what works and makes money for me.

Later
  • #130
  • Jul 13, 2011 6:04am Jul 13, 2011 6:04am
Gotcha. Thanks
  • #131
  • Jul 13, 2011 6:56am Jul 13, 2011 6:56am
I usually don't post in threads where there has been friction. But the topic is of interest. Indicators are indeed derivatives of past data and lagging - but so is Price! Any suggestion that we don't use historical data (Price, Indicators,..etc.) to forecast future price movement is missing a core concept in Technical Analysis imho.

Having said this, I do not use any Indicators/Oscillators which is predominantly due to my own lack of skill using them successfully, and more so because my trading is based on a combination of Supply & Demand and Trend Analysis, and this works best for me. I do occasionally look at a couple of MA's - not to trade; but to reference.

Some Traders here on FF are extremely skilled at using Indicators and I believe they are successful. Examples which come to mind are Fudomyo himself, as well as a couple of MA methodologies by Clay & EO. A positive attitude to learn is always a good start.
"As Kids we believe Anything is Possible; the Trick is to never forget it!"
  • #132
  • Jul 13, 2011 7:06am Jul 13, 2011 7:06am
But do indicators really work for them the questions being.

1. Are they really profitable in the first place ?

2. If so then are they really using the indicators or just good traders and the indicators are merely a required distraction or confidence booster!


Before anyone has a go nothing is inferred these are merely questions.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #133
  • Jul 13, 2011 7:43am Jul 13, 2011 7:43am
Quoting Turveyd
But do indicators really work for them the questions being.

1. Are they really profitable in the first place ?

2. If so then are they really using the indicators or just good traders and the indicators are merely a required distraction or confidence booster!


Before anyone has a go nothing is inferred these are merely questions.
Been following the discussion here and wanted to add my 2 pips worth on these two questions.

Are they profitable? By themselves, they are not. It takes a good trader to make profits using what ever techniques or indicators are available and that are understood by the trader. I have several leading indicators that are statistically significant in letting me know what the market is likely to do. Making a profit is dependant on knowing what to do when the indicator/set up leads you into a wrong decision to minimize your loss, and when to take a profit/has reached your best possible target.

As for the second questions, the good traders here do not let anything become a distraction, especially indicators. But, when indicators fit your trading strategy, you must act, regardless of the outcome. If your strategy is profitable, then you will be profitable, but only is you act.

Good trading!

Edit: there have been several "leading indicators" on the E/$ this morning that would have you going both directions and with nice profits on all trades, which is what I have been doing since London open. Each indicator/set up tells you that the market is moving and in what direction, but also MUST help you id your risk. Understand what the indicator is telling you before using it.
  • #134
  • Edited 7:58am Jul 13, 2011 7:47am | Edited 7:58am
Quoting Turveyd
But do indicators really work for them the questions being.

1. Are they really profitable in the first place ?

2. If so then are they really using the indicators or just good traders and the indicators are merely a required distraction or confidence booster!

Before anyone has a go nothing is inferred these are merely questions.

It is not theirs to reason why,
but to signal Sell or Buy,
for the traders, do or die,
hoping the signal does not lie.

Heard about a farmer that realized everytime his cows were grazing in the south forty, the market went up. Is that a leading indicator?

All price based indicators/oscillators are lagging by nature. That's not to say that a trader cannot use the information in a profitable manner, most use popular indicator settings as a guage of herd mentality..... not as a signal for entrance or exit. When you understand the math and necessary price movement to move or trigger an indicator, then the naked eye viewing the chart will give you everything you need........ divergence indicators are perfect examples of the above.

fwiw
  • #135
  • Jul 13, 2011 8:06am Jul 13, 2011 8:06am
Quoting Turveyd
2. If so then are they really using the indicators or just good traders and the indicators are merely a required distraction or confidence booster!
finally! almost a decent question and not an uninformed opinion! confidence booster is, in a way, part of the situation. expectation booster is a better description. you don't go fishing for marlin in your 20L fish-tank filled with nothing but goldfish. that's a silly expectation and all you will get are goldfish. but people will fish for marlin in their fish tanks because they once saw some guy on tv throw a line into water and out came a big fish.

the fact that we have to battle the spread means we must, at all times, be in a favorable position before we open a trade. if the terrain is crap then the trading results are going to be crap. so don't trade when you KNOW that the terrain is likely going to be crap.

card counting in blackjack can have an edge for players under the right circumstances. you can look at each card as they come out and say that each individual card indicates nothing as to the next likely card to appear and provides no edge. true.

ok so what about looking at a series of cards? great, you see which cards have already been used and which cards are currently in play. this still doesn't indicate what the next x number of cards that come into play are going to be. you still can't crystal ball which cards will come next and so you still have no edge. true.

ok then card counting is pointless and is a lagging indicator! right? it only shows what has been and not what will be. right?

when used in this way, sure! but that's the wrong question. you don't need to know what will be next, only what is likely to be next! what if you take a different perspective and look at card counting not as a way to predict the next series of cards to be played but instead look at it in terms of how likely it is that the dealer will be forced to keep retrieving cards for his hand and suddenly bust-out and therefore give you a win?

leading indicator found! holy grail... not so much. things can still go wrong and not go to expectation, but at least the likelihood of certain events happening has increased by a useable degree and your chances of making a dollar have gone up.

if through all of your statistical research you have not come up with any indicators that provide any useful data, then you have found data that is useless to you. perhaps you should try looking at the data from a different perspective and see if it is INDICATING something else. random data in = random data out. frame the data differently and it will tell a different story that you can use to your advantage.
Congratulations ScalaFX for coming out of the closet!
  • #136
  • Jul 13, 2011 8:15am Jul 13, 2011 8:15am
On phone so brief!

Indicators give a simplified view of price action thats all prefer the detail myself but each to there own.

Rsi and over bought oversold general useage is bad practice as your shorting at the top which is counter trend.

Random chance means the work sometimes your brain focuss on them and ignores the losses so you keep going doing the same thing!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #137
  • Edited 9:15am Jul 13, 2011 9:02am | Edited 9:15am
Quoting Turveyd
Rsi and over bought oversold general useage is bad practice as your shorting at the top which is counter trend.

Random chance means the work sometimes your brain focuss on them and ignores the losses so you keep going doing the same thing!
Good grief Turv. You really don't have a clue how an RSI works, do you?

A momentum indicator can remain oversold longer than you can remain solvent. That's not their purpose at all.

Do yourself a favor and learn a bit more before you speak. Reading Cardwell or Hayden (in link I posted earlier) are good starting points.


Quoting Turveyd
But do indicators really work for them the questions being.

1. Are they really profitable in the first place ?

2. If so then are they really using the indicators or just good traders and the indicators are merely a required distraction or confidence booster!
This is exactly why I don't bother posting much on FF anymore. Every time you think a conversation might go somewhere intelligent or interesting, it rolls all the way back down the hill to beginner's logic.



1. A trader can be profitable trading with an indicator. The indicator itself isn't profitable, it's how a trader integrates the indicator into their process that makes the trader more profitable.

2. Indicators fall into 3 classifications.

Some indicators are useless because they teach you nothing about price behavior (especially black box red/blue histograms that repaint)

Some are like training wheels, which eventually, once a trader has enough knowledge, they take off.

Some do calculations that are far too difficult to do manually, so we take advantage of the computer to calculate these for us.



Quoting Turveyd
Ive actually statistically tested most indicators if there was a useable edge on any of them id use it but there isnt so i dont sadly

To properly test something it needs to be measured with scientific accuracy against a mean utilizing a wide range of settings across many different market conditions. This takes years of hard work.

From the level of dialog you engage in, I don't see the type of intellectual acumen, discipline, or attention to detail necessary to carry out an experiment for the proper length of time to reach an actual statistical proof.

Making grand pronouncements that can't be backed up with any form of logic or data is a waste of time and grossly inaccurate. But you seem to enjoy doing it anyway.


Good luck mate.
  • #138
  • Jul 13, 2011 9:08am Jul 13, 2011 9:08am
Quoting nubcake
card counting in blackjack can have an edge for players under the right circumstances. you can look at each card as they come out and say that each individual card indicates nothing as to the next likely card to appear and provides no edge. true.

ok so what about looking at a series of cards? great, you see which cards have already been used and which cards are currently in play. this still doesn't indicate what the next x number of cards that come into play are going to be. you still can't crystal ball which cards will come next and so you...

Best analogy i have read yet regarding indicators.
  • #139
  • Jul 13, 2011 10:25am Jul 13, 2011 10:25am
Quoting Fudomyo
Good grief Turv. You really don't have a clue how an RSI works, do you?

A momentum indicator can remain oversold longer than you can remain solvent. That's not their purpose at all.

Do yourself a favor and learn a bit more before you speak. Reading Cardwell or Hayden (in link I posted earlier) are good starting points.




This is exactly why I don't bother posting much on FF anymore. Every time you think a conversation might go somewhere intelligent or interesting, it rolls all the way back down the hill to beginner's logic.



1....
Well said. Indicators/systems/techniques/TA/FA/etc don't "work", the trader works. Traders know that success depends on discipline, focus, attitude, mental stability, and all the other stuff that helps you build a trading mind set versus your basic standard brain. Intellegent wanabees are a dime a dozen in the forex market; traders get it done.
  • #140
  • Jul 13, 2011 1:06pm Jul 13, 2011 1:06pm
Quoting Fudomyo
Yes.

Exactly.

But you can't teach or show people this.

it's an inherent trait.


FF is a hotbed of confusion inhabited by long term losers.

When I first came here, I thought I would find peers. Independant traders who were self sufficient, that I could exchange ideas with.

After 2 years of talking with people here and on skype, every single senior trader I met personally had a day job, or blew up their account, or was a hobbiest.

every one.

not just half or 99%.

every single one.

2 fucking years.

In 2 years I have not...
I spend most of my FF time in the TAF thread where I find a lot of very nice and hard working people. As for my experience here, I am astonished at the number of people who blow accounts, and who discuss the topic with a sense of pride. Outside of TAF, most everyone is confused (they tend to equate intellegence with a capacity to learn trading), angry (they tend to get in a lot of arguments), or are just too new to trading and don't understand what is in front of them. FYI, I am a full time forex trader but do not participate in chat groups or skype discussions, because I am a trader who is too busy to do that stuff. FF can be a nice distraction while trade setups are developing, or once a trade is in and developing. Best wishes to you and good trading.
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