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Why exactly do EMA crossover systems not work?

  • #321
  • Jul 25, 2011 2:08pm Jul 25, 2011 2:08pm
Quoting Troikaone1
So you are telling me that a 13 year old, with reasonable intelligence, can trade FX using a backtested system and can outtrade FX traders who have been at this for decades ? WHAT???????? ARE YOU SERIOUS????????
If you have a profitable backtested system you are ALREADY outsmarting a lot of traders, assuming you follow its trading rules with discipline.

Let's say you are using a simple moving average cross-over system like the one I described yesterday. Your system gives you a buy signal and you buy. 10 days later you are sitting on a 800 pip profit and your system tells you to close the position. Who did outsmart them?

Well you outsmarted (and took a lot of money from these) three groups of people:

1: All the amateurs who think that the market is "overvalued" and is about to reverse. These rookies are constantly fishing for tops and bottoms.

2: All the idiots who saw the break-up but are still stubbornly holding a short position. They will hold still until their initial 50 pip stop becomes a 500 pip loss.

3: All the imbeciles who are averaging down and shorting more and more lots as the market moves against them. These morons always think they can teach the market a lesson.

And that's the job of a profitable backtested system, to take the money from the weak and give it to the strong.
  • #322
  • Jul 25, 2011 2:08pm Jul 25, 2011 2:08pm
Hello all , Thought I would add my 2 cents ..

MA crosses work well for me , I make my living trading the EU with a 3 and 5 MA .

If it is a small ranging day I switch to a smaller timeframe and catch the small swings for 5 pips or so .

The key for me has been to focus only on the cross for entries and exits , don't set a target or have any bias .

Take small bites and don't try for home runs ..
  • #323
  • Jul 25, 2011 2:10pm Jul 25, 2011 2:10pm
Quoting Lucky Duke
If you are expecting anyone to hand you the key to the kingdom, good luck with that. What fucking cartoon did you grow up in?
Iif you think I'm talking sideways, it's not my job to deliver anything to you on a platter.

I worked for mine, what makes it yours?

This is the problem here.

People share insight and then are attacked for not giving away the farm.

You want the fucking farm?

Earn it.
Why the hate here?

You stated some truisms about trading and I about the forum participants. We are essentially doing the same thing .

Anyways, no dude, I am a town kid, I don't need a farm. But if you have something to say, then either say it straight or not at all. Easy.
  • #324
  • Jul 25, 2011 2:26pm Jul 25, 2011 2:26pm
Quoting Mr Breakout
If you have a profitable backtested system you are ALREADY outsmarting a lot of traders, assuming you follow its trading rules with discipline.

Let's say you are using a simple moving average cross-over system like the one I described yesterday. Your system gives you a buy signal and you buy. 10 days later you are sitting on a 800 pip profit and your system tells you to close the position. Who did outsmart them?

Well you outsmarted (and took a lot of money from these) three groups of people:

1: All the amateurs who think that the...
I'll believe backtesting works when I see two things:

1. When Tradestation becomes a household name like Apple where thousands of folks will stand in line overnight to get the latest version of these magnificient backtesting programs that they offer


2. When people quit their jobs in the millions to trade based on highly reliable backtested systems as featured in Currency Trader magazine
  • #325
  • Jul 25, 2011 2:32pm Jul 25, 2011 2:32pm
Quoting Troikaone1
I'll believe backtesting works when I see two things:

1. When Tradestation becomes a household name like Apple where thousands of folks will stand in line overnight to get the latest version of these magnificient backtesting programs that they offer


2. When people quit their jobs in the millions to trade based on highly reliable backtested systems as featured in Currency Trader magazine
hm, but you do know, that in science they use similar methods? They take historical data and try to find patterns in there. Also with programs.

I don't know why similar methods to what scientists use, shouldn't be applicable in trading. Of course it's insane work to find something consistent, but at least then you know with a statistical likelihood that the edge you found is real and robust.

Anyways, enough of this backtesting talk. Some swear by it and some don't. Easy. Trading can be done in different ways and it would be a shame if everybody would approach trading from the same angle. Some are more creative & intuitive and others more scientific. Both ways have their merit.
  • #326
  • Jul 25, 2011 2:39pm Jul 25, 2011 2:39pm
Quoting smittens4212

If we could all just define when the market was ranging and when it was trending, trading would be insanely easy.
Well if you are a trend-follower, just avoid trading if ADX is between 0 and 25 and you will eliminate a few false breakouts. It is not a perfect indicator but at least it will help you locate and stay out of most trading-range market conditions.
  • #327
  • Jul 25, 2011 2:41pm Jul 25, 2011 2:41pm
Quoting Custos
hm, but you do know, that in science they use similar methods? They take historical data and try to find patterns in there. Also with programs.

I don't know why similar methods to what scientists use, shouldn't be applicable in trading. Of course it's insane work to find something consistent, but at least then you know with a statistical likelihood that the edge you found is real and robust.

Anyways, enough about this backtesting talk. Some swear by it and some don't. Easy. Trading can be done in different ways and it would be a shame if everybody...
I rely heavily on historical data. I use it to verify my methodology. It is very much a hands on approach. You apply your methodology in various scenarios using a predefined set of money management principles. Why do I need a computer to do that? Anyway, more power to my backtest buddies out there....go get it if it works for you!!!!
  • #328
  • Jul 25, 2011 2:42pm Jul 25, 2011 2:42pm
Quoting Custos
Why the hate here?

You stated some truisms about trading and I about the forum participants. We are essentially doing the same thing .

Anyways, no dude, I am a town kid, I don't need a farm. But if you have something to say, then either say it straight or not at all. Easy.
No hate.

There was nothing cryptic in my words or sentiment.

And if I took offense at being compared to a politician, diplomat, or guru, I hope you can understand my aversion.
  • #329
  • Jul 25, 2011 2:44pm Jul 25, 2011 2:44pm
Quoting Lucky Duke
And if I took offense at being compared to a politician, diplomat, or guru, I hope you understand my aversion.
Then I apologize at this point.

cheers
  • #330
  • Jul 25, 2011 2:45pm Jul 25, 2011 2:45pm
Quoting Custos
hm, but you do know, that in science they use similar methods? They take historical data and try to find patterns in there. Also with programs.

I don't know why similar methods to what scientists use, shouldn't be applicable in trading. Of course it's insane work to find something consistent, but at least then you know with a statistical likelihood that the edge you found is real and robust.

Anyways, enough of this backtesting talk. Some swear by it and some don't. Easy. Trading can be done in different ways and it would be a shame if everybody...
that's cool. but what will you do if your backtested system starts to fail in the future, or even eventually ruins your account? if it goes pear-shaped and no longer works, what then? do you go back and try to data mine for a new seemingly profitable system? if you have to start all over again a lot of people are left with, as troika put it, throwing a bunch of stuff at the wall to see what sticks (hence new system after system. the next best MA bounce system etc).

seriously, what would you do if 5 years from now this happens to your ea?
Congratulations ScalaFX for coming out of the closet!
  • #331
  • Jul 25, 2011 2:52pm Jul 25, 2011 2:52pm
Quoting Troikaone1
Why do I need a computer to do that?
Really? Well try to manually backtest even the simplest trading system with 10 years of data in 25 currency pairs on the 1 min time frame and an entire lifetime would not be enough to finish the test, asuming you do not make mistakes.

And of course forget about backtesting 10 or 20 new systems a month with the same set of data and time frame.
  • #332
  • Jul 25, 2011 2:55pm Jul 25, 2011 2:55pm
Quoting nubcake
that's cool. but what will you do if your backtested system starts to fail in the future, or even eventually ruins your account? if it goes pear-shaped and no longer works, what then? do you go back and try to data mine for a new seemingly profitable system? if you have to start all over again a lot of people are left with, as troika put it, throwing a bunch of stuff at the wall to see what sticks (hence new system after system. the next best MA bounce system etc).

seriously, what would you do if 5 years from now this happens to your ea?
interesting question, and I have thought about that myself as well. I think I have come up with some solutions.

The first solution is diversification: I have now 3 independent systems which each trade 3 pairs.
Secondly I know my max drawdown figure: so if one of my systems ever went above the max drawdown line, then it is an indication that it starts failing. Then I would stop using it. So, no it won't ruin my account.

You know, essentially what I do all day long is finding new approaches, so I could diversify even more. I hope that in 5 years from now I have enough independent approaches and that they don't all start failing at once.

But who knows, if they actually all failed, then yes, I would start at zero and look for a method that ecompasses also the newest period. Here it is obviously important to not curve-fit anything, so that would be another obstacle.
  • #333
  • Jul 25, 2011 2:57pm Jul 25, 2011 2:57pm
OK, this thread has already answered the question in post #1. Some traders use MA, others do not; some traders make money using MA, others do not. You need to do two things to become a successful trader; develop a system that works for you, and have enough faith in that system to use it every day. These two things are the only things standing in your way. Figure it out (on your own) or find something else to do, but quite bitching about not finding the answers, or not finding someone who can explain it to you in a way that you can understand.

There are people here who get it (and profit from it), people who are honestly trying to find it, and a few who just bitch and complain non-stop (about anything and everything) -- poor you! Everyone should become familiar with the ignore function of FF and perhaps the latter would go away.
  • #334
  • Jul 25, 2011 2:59pm Jul 25, 2011 2:59pm
Quoting Mr Breakout
Really? Well try to manually backtest even the simplest trading system with 10 years of data in 25 currency pairs on the 1 min time frame and an entire lifetime would not be enough to finish the test, asuming you do not make mistakes.

And of course forget about backtesting 10 or 20 new systems a month with the same set of data and time frame.
lol......My system works fine.......no need for all of that.......as the young folks say......."you do you". My biggest problem is trading in larger lot sizes.....my goal is to trade very large like the big boys. My 1 mini lot days are long behind me.......I trade 3 to 4 mini lots at a time. I would like to trade standard lots with the same efficiency as I trade mini lots. My system is ready....but I am not ready.
  • #335
  • Jul 25, 2011 3:07pm Jul 25, 2011 3:07pm
Quoting nubcake
what will you do if your backtested system starts to fail in the future, or even eventually ruins your account?
A robust trading system does not "fail in the future". A system either has a trading edge or it doesn't, time has virtually no effect on its profitability. It a system fails after a few months or a couple of years then it was a losing system from the beginning, period.

I can show you trading systems that are still making money since their creation, more than 25 years ago, and with the same trading rules.
  • #336
  • Jul 25, 2011 3:08pm Jul 25, 2011 3:08pm
Quoting Custos
But who knows, if they actually all failed, then yes, I would start at zero and look for a method that ecompasses also the newest period. Here it is obviously important to not curve-fit anything, so that would be another obstacle.
and now you understand why i'm personally not interested in trading slow timeframes scratching out low profits with questionable systems / methods. i can think of nothing worse than finding-out in 1 year, 5 years, 10 years time that all of the slow gains was an anomoly, and then have to start all over again from square 1. the idea is to make money... generally lots of money. not only do you have to find a way to carve profits from trading you also have to fork-over large chunks of the earned money to the friggin tax man (something most people never even stop to consider because they will never have to deal with this). it's all an uphill battle.
Congratulations ScalaFX for coming out of the closet!
  • #337
  • Jul 25, 2011 3:12pm Jul 25, 2011 3:12pm
Quoting GEfx
There are people here who get it (and profit from it), people who are honestly trying to find it, and a few who just bitch and complain non-stop (about anything and everything) -- poor you! Everyone should become familiar with the ignore function of FF and perhaps the latter would go away.
so gtfo and stop your bitching. you contribute nothing but posturing. go back to riding on coat-tails. simple. instead you would rather moan your inane complaints and fish for people to pat you on the back. sad.

when did forums stop being about posting? you do complain a lot these days gefx, so why stay?
Congratulations ScalaFX for coming out of the closet!
  • #338
  • Jul 25, 2011 3:14pm Jul 25, 2011 3:14pm
Quoting Mr Breakout
A robust trading system does not "fail in the future". A system either has a trading edge or it doesn't, time has virtually no effect on its profitability. It a system fails after a few months or a couple of years then it was a losing system from the beginning, period.

I can show you trading systems that are still making money since their creation, more than 25 years ago, and with the same trading rules.

Doubt there is a system which works for ever ever, got to keep adapting, find what is currently working exploit it and when it stops find something else quickly before you give to much back, they change the game when everyone catches on and they start losing to take back there losses and some more.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #339
  • Jul 25, 2011 3:14pm Jul 25, 2011 3:14pm
Quoting Mr Breakout
A robust trading system does not "fail in the future". A system either has a trading edge or it doesn't, time has virtually no effect on its profitability. It a system fails after a few months or a couple of years then it was a losing system from the beginning, period.
precisely my point. this crossing that when x = y does not a robust system make. when the reasoning behind doing something or adding something is "just because it seems to work" it fails to inspire confidence in its future potential to continue working. no?
Congratulations ScalaFX for coming out of the closet!
  • #340
  • Jul 25, 2011 3:16pm Jul 25, 2011 3:16pm
LOL thats rich coming from you Nubcake, 1 of the lower forms of life on this forum!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
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