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Why exactly do EMA crossover systems not work?

  • #281
  • Jul 25, 2011 2:26am Jul 25, 2011 2:26am
let me try to jump into the fire here.

What do you tell a layman who has never learnt physics about the gravity? The layman knows that if he throws something up, it comes down due to gravity. He knows nothing else. He knows certain things fall faster depending on the shape of the object. He observes and notices a pattern. So he comes to a conclusion that a feather will always fall slower than a tennis ball.

Someone who studies physics will say it is not true because a tennis ball and a feather will fall at the same speed in a vacuum.

So... on one hand, some people are saying MA crosses don't work because it is curve fitted etc etc. But to the layman, and his observations, it works. In fact it works with enough consistancy to make a living out of it.

Did the layman ever know why it works or the exact situations where it won't work? No he doesn't. He just knows it works based on a bunch of observations. This alone is enough to be a trading edge.

I know people who makes millions using ma crosses and still do today. I know others who swears that it never works.

My conclusion: It works. You just got to know how to make it work. Just like every other edge you "think" you have.
  • #282
  • Jul 25, 2011 2:29am Jul 25, 2011 2:29am
Quoting Sauron
I didn't understand correctly, I thought you mean that it is impossible to curve fit due to the size of data and not that the data is big enough to prove that your system works.
Not sure I quite understand your post Sauron, could you please be more specific? Thanks.

And now back to the charts, there is some serious action on the EUR/CHF...
  • #283
  • Jul 25, 2011 2:35am Jul 25, 2011 2:35am
Quoting thelws
let me try to jump into the fire here.

What do you tell a layman who has never learnt physics about the gravity? The layman knows that if he throws something up, it comes down due to gravity. He knows nothing else. He knows certain things fall faster depending on the shape of the object. He observes and notices a pattern. So he comes to a conclusion that a feather will always fall slower than a tennis ball.

Someone who studies physics will say it is not true because a tennis ball and a feather will fall at the same speed in a vacuum.

So... on...
so it works.... but it doesn't?

seems to me, a layman, that perhaps the edge has NOTHING AT ALL to do with the crossover.

it's the same old story. it works IF you add the secret sauce. if you DON'T add the secret sauce then it doesn't work. ever wondered if the secret sauce had something to do with it and not just the crossover? "why exactly do ema crossover systems not work?"... because they have no basis to work. maybe add in some logical concepts that frame things differently and suddenly an EMA crossover might very-well work, or not.

i feel like making it rain. i better stand outside and dance for awhile (on one leg, no less).
Congratulations ScalaFX for coming out of the closet!
  • #284
  • Jul 25, 2011 2:46am Jul 25, 2011 2:46am
Quoting nubcake
so it works.... but it doesn't?

seems to me, a layman, that perhaps the edge has NOTHING AT ALL to do with the crossover.

it's the same old story. it works IF you add the secret sauce. if you DON'T add the secret sauce then it doesn't work. ever wondered if the secret sauce had something to do with it and not just the crossover? "why exactly do ema crossover systems not work?"... because they have no basis to work. maybe add in some logical concepts that frame things differently and suddenly an EMA crossover might very-well work, or not.

i...
yes. indeed. everything needs a secret sauce. I can teach price action to 10 different people, and 10 different people will get vastly differing results. The secret sauce here is psychology and money management.

But, as to whether moving averages work or not - like I said, the layman did an observation and discovered that a feather will always fall slower than a tennis ball. He can go all around the world - ireland, indonesia, maldives and he finds that his theory is true everywhere. But if you put him on the moon, he will be dumbfound.

You can argue that it does not happen in a vacuum and you are right. But it does not mean that a feather will not fall slower than a tennis ball in everyday life. You just managed to find a situation where the layman's theory and observation is wrong.

But as always, as long as the layman is not on the moon, his theory will always be true and therefore his "edge" is born. MA crosses have been around forever. It is proof that it works. It might not be as successful as other 300% return strategies, but it works.
  • #285
  • Jul 25, 2011 2:58am Jul 25, 2011 2:58am
Quoting thelws
yes. indeed. everything needs a secret sauce. I can teach price action to 10 different people, and 10 different people will get vastly differing results. The secret sauce here is psychology and money management.

But, as to whether moving averages work or not - like I said, the layman did an observation and discovered that a feather will always fall slower than a tennis ball. He can go all around the world - ireland, indonesia, maldives and he finds that his theory is true everywhere. But if you put him on the moon, he will be dumbfound.

You can...
the example is cute, but it fails to consider REAL WORLD things like wind, rain, pockets of rising heat, etc. it's all well and good to generalize and say that a feather drops at such and such a rate (curve-fit) which has no real basis in the reality of the situation and will continue to be true until such time as that particular set of circumstances shifts, whether dramatically or in a subtle way.

as troikaone1 has said, a lot of these "discoveries" that people keep making are simply bullshit patterns they find within random data which doesn't reflect a set of concepts that exploit an actual edge. why else do we keep having brand new 'systems' in the systems section all of the time? each new thread started should be called "my latest greatest curve-fit" with some slapstick bundle of rules and indicators which will eventually die-off, or a bunch of hardcores will keep trading it and swear by it (when in reality they are probably incorporating something more akin to an actual edge added on top of the random rules and indicator garbage and they simply can't define this 'discretionary' element).
Congratulations ScalaFX for coming out of the closet!
  • #286
  • Jul 25, 2011 3:05am Jul 25, 2011 3:05am
Quoting nubcake
the example is cute, but it fails to consider REAL WORLD things like wind, rain, pockets of rising heat, etc. it's all well and good to generalize and say that a feather drops at such and such a rate (curve-fit) which has no real basis in the reality of the situation and will continue to be true until such time as that particular set of circumstances shifts, whether dramatically or in a subtle way.

as troikaone1 has said, a lot of these "discoveries" that people keep making are simply bullshit patterns they find within random data which doesn't...
second that!

to predict is to fail, to analyse and objectively adapt to market conditions and have way to exploit it when you are right, is success

fundamentals give you direction, technicals give you timing, direction + timing = profit
AVT INVENIAM VIAM AVT FACIAM
  • #287
  • Jul 25, 2011 3:09am Jul 25, 2011 3:09am
Quoting nubcake
"why exactly do ema crossover systems not work?"...
They do, I just posted the proof a few hours ago, now do your part and show us that they don't, using 198 months worth of data and 21 different markets. Go ahead Professor.

Quoting nubcake
because they have no basis to work.
Wrong again. MA work precisely because there is an irrefutable logic behind them : Every freely traded market has a trend. This non-randomness of the market is what allows the trader to profit using a couple of simple mechanical trading rules.

On the other hand backtest a moving average with randomly generated prices and after 1,000 or 2,000 "trades" you will end up with zero profit and zero loss on average, assuming the spread is zero. Why? Because there is no real trend to exploit.
  • #288
  • Jul 25, 2011 3:15am Jul 25, 2011 3:15am
Quoting nubcake
the example is cute, but it fails to consider REAL WORLD things like wind, rain, pockets of rising heat, etc. it's all well and good to generalize and say that a feather drops at such and such a rate (curve-fit) which has no real basis in the reality of the situation and will continue to be true until such time as that particular set of circumstances shifts, whether dramatically or in a subtle way.

as troikaone1 has said, a lot of these "discoveries" that people keep making are simply bullshit patterns they find within random data which doesn't...
you forget that MA were derived by your so called basis of reality. If you trace all the way back to the history of moving averages, you will know that it is grounded in heavy maths and sound logical theory.

Your argument that we fail to take notice about all those random elements (rain heat etc) that will skew your results and shift conditions to be unfavorable is not important. As long as earth is not a vacuum, a feather will always fall slower than a tennis ball.

As long as trends continue to exist, MA users will continue to have an edge. The only way a MA will ever get wiped out is if the market whipsaws indefinitely. To prove my point, donchian breakouts still work. They just provide a very crappy edge at this day in time. But do they come out +ve at the end of the day? Yes they do. They just don't make 300% like they used to.

How about this, why don't you explain why your method has an edge? The more you explain, the more you will realize that it is based and grounded on observations of certain patterns. Everything starts that way. Even candlesticks. To say that it is not an edge just because you think it is curve fitted is very biased. How do you explain it to people who actually trade using MA successfully?
  • #289
  • Jul 25, 2011 3:25am Jul 25, 2011 3:25am
Quoting thelws

As long as trends continue to exist, MA users will continue to have an edge.
Thelws, just wait a little longer and Nubcake will simply tell you that there is NO such thing as a trend, period.
  • #290
  • Jul 25, 2011 3:28am Jul 25, 2011 3:28am
Quoting thelws
you forget that MA were derived by your so called basis of reality. If you trace all the way back to the history of moving averages, you will know that it is grounded in heavy maths and sound logical theory.

Your argument that we fail to take notice about all those random elements (rain heat etc) that will skew your results and shift conditions to be unfavorable is not important. As long as earth is not a vacuum, a feather will always fall slower than a tennis ball.
the example is still cute, except that ones account won't necessarily be around long enough for this expected trend to show its head again.

so, while you look at the feather and trade it expecting it to go down at a certain rate and follow your expected pattern because your observations say so, others might look at the feather to get a reading on the current conditions and objectively see what the current weather is like. the feather can do whatever the hell it wants in this case.

Quote
As long as trends continue to exist, MA users will continue to have an edge. The only way a MA will ever get wiped out is if the market whipsaws indefinitely. To prove my point, donchian breakouts still work. They just provide a very crappy edge at this day in time. But do they come out +ve at the end of the day? Yes they do. They just don't make 300% like they used to.

How about this, why don't you explain why your method has an edge? The more you explain, the more you will realize that it is based and grounded on observations of certain patterns....

yes, patterns. not all patterns are created equal. i can ram my head into a wall and expect pain (much like this conversation), just as i can dance on one leg and expect the clouds to give me rain. one has more basis in reality than the other. don't expect the local shaman to know the difference though while he prays to his voodoo gods and sacrifices a goat for the sake of his wife giving him a healthy son.
Congratulations ScalaFX for coming out of the closet!
  • #291
  • Jul 25, 2011 3:31am Jul 25, 2011 3:31am
Quoting nubcake
the example is still cute, except that ones account won't necessarily be around long enough for this expected trend to show its head again.

so, while you look at the feather and trade it expecting it to go down at a certain rate and follow your expected pattern because your observations say so, others might look at the feather to get a reading on the current conditions and objectively see what the current weather is like. the feather can do whatever the hell it wants in this case.



yes, patterns. not all patterns are created equal. i can ram...
haha, you are funny, on the one hand you are not profitable yet, on the other hand you reject everything people say.

So what do you believe in? How can one profit then from the markets, if everything other people say is garbage?
  • #292
  • Jul 25, 2011 3:46am Jul 25, 2011 3:46am
Quoting Custos
haha, you are funny, on the one hand you are not profitable yet, on the other hand you reject everything people say.

So what do you believe in? How can one profit then from the markets, if everything other people say is garbage?
i'm also an atheist, and unlike some in the past i don't believe the world is flat or that earth is the center of the universe... can you see a trend?

some people don't just accept nonsense because someone says to. if one can't give a logical "why" then what do they have but blind faith? some people can get by on luck... how nice for them. it'll be a humble pie filled day when the mighty faithful fall.
Congratulations ScalaFX for coming out of the closet!
  • #293
  • Jul 25, 2011 3:49am Jul 25, 2011 3:49am
Quoting nubcake
i'm also an atheist, and unlike some in the past i don't believe the world is flat or that earth is the center of the universe... can you see a trend?

some people don't just accept nonsense because someone says to. if one can't give a logical "why" then what do they have but blind faith? some people can get by on luck... how nice for them. it'll be a humble pie filled day when the mighty faithful fall.
I think people here gave enough reasons why an ma crossover might work. I just find it fascinating, that all your posts are just about criticizing methods. I really wonder if you have any methods left to trade, which you didn't criticize yet.

I would be more calm in my tone, if I was not profitable yet and don't know what works and what doesn't.
  • #294
  • Jul 25, 2011 3:52am Jul 25, 2011 3:52am
Quoting Custos
I think people here gave enough reasons why an ma crossover might work. I just find it fascinating, that all your posts are just about criticizing methods. I really wonder if you have any methods left to trade, which you didn't criticize yet.

I would be more calm in my tone, if I was not profitable yet and don't know what works and what doesn't.
oh pardon me sir custos for having a bullshit detector that actually works. i aspire to some day have an ea that pulls less than 100% p.a. just like you!!!

go watch floored again. i notice you haven't replied in other parts of the forum where i mention the starting capital of some traders in the film. funny that!
Congratulations ScalaFX for coming out of the closet!
  • #295
  • Jul 25, 2011 3:54am Jul 25, 2011 3:54am
Quoting nubcake
oh pardon me sir custos for having a bullshit detector that actually works. i aspire to some day have an ea that pulls less than 100% p.a. just like you!!!

go watch floored again. i notice you haven't replied in other parts of the forum where i mention the starting capital of some traders in the film. funny that!
yeah man, I don't follow all your posts .

But you still didn't reply, so what works in your opinion in the market? You talk like a wise guy, yet you didn't give specific details on how you think one can be profitable in the markets. I would welcome a discussion about that.
  • #296
  • Jul 25, 2011 3:58am Jul 25, 2011 3:58am
Quoting Custos
yeah man, I don't follow all your posts .

But you still didn't reply, so what works in your opinion in the market? You talk like a wise guy, yet you didn't give specific details on how you think one can be profitable in the markets. I would welcome a discussion about that.
i don't see you ponying up your EA. for what reason would i have to help those who want to believe in fairy tales?

this is the thing custos. you consider yourself profitable, but from what tidbits you have mentioned around the place i personally don't consider you to be profitable. so, posture posture posture. it's all the same old story.
Congratulations ScalaFX for coming out of the closet!
  • #297
  • Jul 25, 2011 4:01am Jul 25, 2011 4:01am
Quoting nubcake
i don't see you ponying up your EA. for what reason would i have to help those who want to believe in fairy tales?

this is the thing custos. you consider yourself profitable, but from what tidbits you have mentioned around the place i personally don't consider you to be profitable. so, posture posture posture. it's all the same old story.
haha, you are a funny guy. You must have had debate class in school, cause you constantly try avoiding difficult questions and trying to turn the conversation around.

Anyways, as I said in another post, I hope you can find your insane "money making machine" method.

Maybe just consider being less confrontational when you still have no clue on how to make money in this market consistently.
  • #298
  • Jul 25, 2011 4:07am Jul 25, 2011 4:07am
Quoting Custos
haha, you are a funny guy. You must have had debate class in school, cause you constantly try avoiding difficult questions and trying to turn the conversation around.

Anyways, as I said on another post, I hope you can find your insane "money making machine" method.

Maybe just consider being less confrontational when you still have no clue on how to make money in this market consistently.
me too. just as i hope your super-savings account ea continue to work as expected! hug time.

maybe i should just do like all of the cool kids and trade based on faith and hope and throw reason to the wind? that seems to be the way to be taken seriously around here... and that's seriously fu...messed-up!

like lambs to the slaughter.
Congratulations ScalaFX for coming out of the closet!
  • #299
  • Jul 25, 2011 4:12am Jul 25, 2011 4:12am
Quoting Custos

Maybe just consider being less confrontational when you still have no clue on how to make money in this market consistently.
I think Nubcake will eventually make money in the Forex one day... by simply running out of non-backtested systems that do not work!
  • #300
  • Jul 25, 2011 4:12am Jul 25, 2011 4:12am
Quoting nubcake
me too. just as i hope your super-savings account ea continue to work as expected! hug time.
Good, I needed that hug, haha

Quoting nubcake
maybe i should just do like all of the cool kids and trade based on faith and hope and throw reason to the wind? that seems to be the way to be taken seriously around here... and that's seriously fu...messed-up!

like lambs to the slaughter.
well, you are definitely right to be critical about things posted. But I think you also should be a bit more open to ideas before rejecting them. I normally test almost everything I hear, no matter if I consider it bs or not. Only after these tests I then get an opinion on why certain things might have a chance of being an edge or not.

Anyways, my message was that you should be a little less confrontational until you definitely know that something doesn't work.

cheers
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