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As Easy as "PI"

  • #41
  • Jan 4, 2013 2:02am Jan 4, 2013 2:02am
Hey spyderman - this is a truly fascinating strategy and one that will fit in well with my time schedule.

If you get a chance, could you talk more about which pairs you trade and when? How do you identify a pair that is about to trend?

Thanks!

Pete

Quoting spyderman
Selected pairs:

It's important to realize that I do not trade this system on a purely mechanical or technical basis. I don't take every cross or trade every pair.
Some pairs and market conditions just aren't conducive to a trend play position.

Check out the NzdUsd chart. Lots of crosses and a couple of trends, but extremely choppy. I'd just as soon stay out of these types of pairs until they look a little more trendy.
  • #42
  • Jan 4, 2013 10:19am Jan 4, 2013 10:19am
Quoting TheMaxx
Hey spyderman - this is a truly fascinating strategy and one that will fit in well with my time schedule.

If you get a chance, could you talk more about which pairs you trade and when? How do you identify a pair that is about to trend?

Thanks!

Pete

Well, as you can imagine, I can't identify pairs that are about to trend. Trend following in general is just that, following a trend once it begins. MA's, or any other indicator that I know of, are lagging. They tell you what the market has done to that point. Now that may well give an indication of what could happen in the future, but you never know for sure. Otherwise we'd all be rich.

Now in addition to looking at pairs that have been trending well recently, I also look at the news and global sentiment. I've been studying about order flow recently and I believe it can help any system to be traded better.

For example, I'm in several excellent positions on the JPY pairs. You can look at the chart history of the pairs and see they're not bad as far as trending goes. But if you couple that with the information coming out of Japan on their stance on weakening the Yen, then the global sentiment is to short the Yen for the foreseeable future. That validates the trend and then you can just look to add.

With the USD you have a partial "fiscal cliff" resolution now and with the FOMC making statements about ceasing QE over the next year, what seems to be a stengthening dollar. That should favor going long USD through 2013 (not that there aren't other factors like incresed risk appetite).

I think you could do a fair job with this system (time will tell) trading it straight technical. But if you factor in some descretionary order flow principles, then I think it will excel.
  • #43
  • Jan 4, 2013 10:24am Jan 4, 2013 10:24am
Quoting spyderman
I think you could do a fair job with this system (time will tell) trading it straight technical. But if you factor in some descretionary order flow principles, then I think it will excel.
Excellent, thank you. May I ask where you get your news and global sentiment? IFR Markets?
  • #44
  • Edited 11:02am Jan 4, 2013 10:46am | Edited 11:02am
Hi Spyderman,

Using this strategy on EURUSD, can a short trade be entered today as there is a MACD cross identified?

Winf
  • #45
  • Jan 4, 2013 12:09pm Jan 4, 2013 12:09pm
Quoting TheMaxx
Excellent, thank you. May I ask where you get your news and global sentiment? IFR Markets?

Yeah,

IFR and Bloomberg.
  • #46
  • Jan 4, 2013 12:12pm Jan 4, 2013 12:12pm
Quoting winforex
Hi Spyderman,

Using this strategy on EURUSD, can a short trade be entered today as there is a MACD cross identified?

Winf
Well as mentioned in post #1 I don't give trade signals But, when I do enter a trade on a cross I typically wait for the close of the daily candle and make sure the MACD has crossed down/up. That hasn't happened on the EurUsd on my platform yet.

That being said, the dollar is performing well of late and the Euro's been falling off. It definitely has my interest piqued.
  • #47
  • Jan 4, 2013 12:19pm Jan 4, 2013 12:19pm
Quoting spyderman
Well as mentioned in post #1 I don't give trade signals But, when I do enter a trade on a cross I typically wait for the close of the daily candle and make sure the MACD has crossed down/up. That hasn't happened on the EurUsd on my platform yet.

That being said, the dollar is performing well of late and the Euro's been falling off. It definitely has my interest piqued.
Thanks Spyderman

Sorry but i was just trying to confirm my analysis matches with the rules.
Yesterday the cross was completed and today i should have entered as per the rules. Right?

Winf
  • #48
  • Jan 4, 2013 12:29pm Jan 4, 2013 12:29pm
Quoting winforex
Thanks Spyderman

Sorry but i was just trying to confirm my analysis matches with the rules.
Yesterday the cross was completed and today i should have entered as per the rules. Right?

Winf

My EurUsd does not show that it has crossed yet. It definitely looks like its headed that way. You can get slightly different readings with different brokers because there daily bars end at different times.
  • #49
  • Jan 5, 2013 12:51am Jan 5, 2013 12:51am
Spidey,

Can it really be true? A system from a respected OP that is both easy to trade and highly profitable at the same time? Impressive! Thanks for sharing.

Best regards,
BC2
  • #50
  • Jan 5, 2013 8:23am Jan 5, 2013 8:23am
Quoting Bobcat2
Spidey,

Can it really be true? A system from a respected OP that is both easy to trade and highly profitable at the same time? Impressive! Thanks for sharing.

Best regards,
BC2

Thanks Bobcat. It's early yet, but I hope it works out. We'll see how it evolves.
  • #51
  • Jan 5, 2013 12:26pm Jan 5, 2013 12:26pm
Spidey,

How did you determine the PI settings (7, 22)?
  • #52
  • Jan 5, 2013 2:18pm Jan 5, 2013 2:18pm
Quoting Bobcat2
Spidey,

How did you determine the PI settings (7, 22)?

I had been working with several indicators, trying to find one that could get me in and out of longer term trends at the best points.
I had found one called the "fisher" that worked very well. But I wanted to convert it to standard MA's so that I could implement alerts and the like.

I tweeked the MA's and MACD until I came up with settings that were closest to the fisher indi. That brought me to 7, 21. Then I just changed it to 22/7 (PI) with no change in the outcome.
  • #53
  • Jan 5, 2013 3:40pm Jan 5, 2013 3:40pm
Congratulation
just do it
  • #54
  • Jan 6, 2013 8:33am Jan 6, 2013 8:33am
Spyderman, the fact is, if you trade a cross of an macd 0 line with 2 ma crossover system you will sooner or later blow your account
  • #55
  • Jan 6, 2013 8:58am Jan 6, 2013 8:58am
Quoting driven18
Spyderman, the fact is, if you trade a cross of an macd 0 line with 2 ma crossover system you will sooner or later blow your account
And exactly why is that?
  • #56
  • Jan 6, 2013 9:32am Jan 6, 2013 9:32am
Quoting driven18
Spyderman, the fact is, if you trade a cross of an macd 0 line with 2 ma crossover system you will sooner or later blow your account
The oracle has spoken..........
  • #57
  • Jan 6, 2013 10:47am Jan 6, 2013 10:47am
Quoting spyderman
And exactly why is that?
Hi Spyderman

i think what driven18 is trying to say is that a simple macd crossover strategy will fail in the long run as any back test will demonstrate , right now you are having some great success because the JPY pairs are so weak so giving you a great result.

Basically what we are saying is a macd zero cross is just a MA crossover strategy and unfortunately as such will run into trouble in the long run. Right now this is working well due to jpy weakness across the board.

However wish you well with your thread just a friendly word of warning.

All the best.
Feel the Fear and do it anyway!!!
  • #58
  • Jan 6, 2013 10:58am Jan 6, 2013 10:58am
You are looking at wrong backtests then.
  • #59
  • Jan 6, 2013 11:11am Jan 6, 2013 11:11am
Here are a couple of MA cross systems you might want to think about befor you say MA cross systems are doomed to failure, these systems are still being traded, there have been losing months during the year but have yet to suffer a losing year.

EUR/USD Only

Do I really want to start this journal

2012 ended the year with 1552 pips

and 2013 is at 149.2 pips so far.......

Also you might consider some of the bigger fish in the trend following world who use similar long term methods.....
  • #60
  • Jan 6, 2013 12:49pm Jan 6, 2013 12:49pm
Quoting clivepackham
Hi Spyderman

i think what driven18 is trying to say is that a simple macd crossover strategy will fail in the long run as any back test will demonstrate , right now you are having some great success because the JPY pairs are so weak so giving you a great result.

Basically what we are saying is a macd zero cross is just a MA crossover strategy and unfortunately as such will run into trouble in the long run. Right now this is working well due to jpy weakness across the board.

However wish you well with your thread just a friendly word of warning.

All...
Well first off, there's a big difference between "running into trouble" and "blowing your account".

Secondly, there's only one thing that moves the market and it ain't MA crossovers. It's not stochastics, or rsi, or trendlines or fibonacci's...it's order flow. People placing buy orders and people placing sell orders.

If my trades are on the same side of the market as the big players that are moving the market (hedge funds, central banks, etc.) then I will profit.

One of the main factors determining where and in what direction the 'smart money' places their trade, at least over the long term, is global sentiment. Now I certainly acknowledge that an MA crossover does not guarantee which direction the market is heading. But it does give a graphical representation of which direction the global market sentiment has been moving to this point and for how long.

As I've already stated, I feel that discretion based on an understanding of market sentiment and order flow, is necessary to maximize this, or any other trading strategy. Most people, especially newer traders, are not inclined to look heavily into market sentiment.

So, in lieu of that, I think there are far worse indicators to 'indicate' the market sentiment than MA's and MACD's
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