200ema and 50ema

[Mathemagician]

Yes, I get that but how do you balance it out? volatility , underlying value?

Yes, well, that's the hard part, isn't it? There are lots of ways to do this. Some are good, and some are bad. For example, I'd steer clear of anything based on margin or underlying value (think about interest rates vs stock indexes to see why). Some of the more common public-domain methods are fixed risk and fixed volatility. With a bit of work one can do a bit better (or a lot worse), but these will take you a long way.

The real point, though, was not to divert the discussion to position sizing / portfolio management, but rather to illustrate that the 50/200 averages do contain tradable information when viewed in the proper context.

jj

 

[TWI]

Thanks Math' I guess I am not going to be able to draw you further on this. Was curious as although I have not played with the 50 vs. 200 MA system myself to see how or indeed if, my MM would produce a similar curve to yours. I know that without MM/risk applied this methodology would be unsuccessful.
I use TS and Rina which is a bit drawn out when testing portfolios of products. Can I ask what you use to do this sort of testing?

 

[Mathemagician]

Thanks Math' I guess I am not going to be able to draw you further on this. Was curious as although I have not played with the 50 vs. 200 MA system myself to see how or indeed if, my MM would produce a similar curve to yours. I know that without MM/risk applied this methodology would be unsuccessful.
I use TS and Rina which is a bit drawn out when testing portfolios of products. Can I ask what you use to do this sort of testing?

It does have a positive expectation without position sizing, but the drawdowns/volatility are enormous.

I use a mix of several tools, most notably TS, C#, and Excel.

jj

 

[theroguetrader]

Thanks Math' I guess I am not going to be able to draw you further on this. Was curious as although I have not played with the 50 vs. 200 MA system myself to see how or indeed if, my MM would produce a similar curve to yours. I know that without MM/risk applied this methodology would be unsuccessful.
I use TS and Rina which is a bit drawn out when testing portfolios of products. Can I ask what you use to do this sort of testing?

Lots of trading systems all look great with hindsight and many try to " curve fit " - (which basically means changing the rules after the event) -
TOO much curve fitting can lead to a false sense of security - ie, altering your senses of perception,logic and judgment, then - the trader starts to believe they can " predict " direction and prices.
Try using a 20/40 SMA -
The market will ALWAYS do whatever it WANTS TO DO..... !!

You gotta learn not to " predict " price movement, but to " REACT TO PRICE MOVEMENT "..!!

 

[luckyd1976]

For me: My LongTerm ETF/Index strategy is a daily chart 65ema/260sma.
65 is a quarterly report and the 260 is my annual report.
Or
13ema/52sma for you weekly chart traders lol

 

[DannyBly]

The 50 EMA crossing the 200 EMA on the hourly has seemed to be a great signal from what I've been looking at recently in the fx market