I use averaged price levels .especially wen they converge with multiple time periods.i then use extentions of short time frames which especially wen they start to converge.i trade the gap between these points.
If you are looking to minimize the lag there are several MA that does that, problem is that you might get to many signals Try search for HullMA or JMA for a fast MA
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Can you elaborate on the intuition behind the Hull MA ? I can't seem to understand what is around the web
Hi, So I am trying to develop a trading system with moving averages. Based on moving average only the system makes money - that is if the entry/exit was at moving average. But if I enter/exit at open after the signal is identified I get screwed. Obviously moving average smooths the price and lags behind which ever period I set. But can you recommend a way to minimize the lag (as in minimize the difference between signal and next open price). I suppose there will be a trade off between signal and entry. Maybe use a weighted MA ? Thanks.
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You will always run into this same issue, no matter how you work with moving average crosses for triggers.
It looks good on hindsight charts, but this is where you have to appreciate where and when the actual trade gets taken. It will always limit the range and especially if you are closing and reversing on counter signals.
It's a bitch, but an actual issue.
Depending on the time frame you are testing/trading, you can apply these mathematically to a lower time frame and look for either triggers there, or add an additional trigger to the trend you have identified.
From both a personal live trade and working with EAs, I think that the Stochastics might make a nice little addition to your ideas. Define the trend with Moving averages and trigger with Stochs. Really, not that uncommon of a practice and something you can pick up from several active trade threads here at FF.
Ideas as they are...
Lets say you are looking at the M5 charts and you are using the Default MACD Moving Averages, 12/26. Move these to the M1 by multiplying them by 5, and you get 60/130...plot these as your primaries on your MACD, drop them onto an M1 chart and have a look at what the M1 default stochs would tell you.
When the Fast is above slow, you can easily see this in your MACD. When Price is Overbought and Oversold on your stochs and you look at standard main crossing signal in direction of the trend...it can lend itself to what you have in mind.
Customize these to the Time frames you have in mind, look back to their apparent success on pairs using the historical charts and see whatcha come up with.
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