Pazienza
Senior member
- Messages
- 2,334
- Likes
- 442
1. Nothing works. Absolutely nothing.
2. MA cross systems get beaten to a pulp in choppy periods and periods of consolidation. So if you see the great returns during strong trend periods, don't forget that markets spend most of their time going sideways.
3. MA systems are basically a load of boll0cks anyway.
MAs are good for confirming trend but you will almost always need a more timely entry / exit signal. With additional elements and refinements like that they work pretty well, as would any trend-following methodology.
Note that using a MA crossover for entry and a reverse crossover for the exit is almost guaranteed to lose: I have seen negative academic studies of MA-based trading conclude it won't work but their failure was more down to their irrational exit strategy than the entry points.
Note that using a MA crossover for entry and a reverse crossover for the exit is almost guaranteed to lose: I have seen negative academic studies of MA-based trading conclude it won't work but their failure was more down to their irrational exit strategy than the entry points.
Pazienza
Senior member
- Messages
- 2,334
- Likes
- 442
I use my eyes and my brain to determine what the trend is. I don't think it is as simple as saying "above line x, uptrend". If you really want a cut and dried thing (it isn't) I guess I'd say HH HL and LL LH
"All techniques seem to crash in consolidation phases of the market."
I strongly disagree.
L
Liquid validity
Do moving average trading systems work?
Short answer - absolutely no way, as others have said, they are too laggy, can give too many
vague signals and in ranging markets they will give any money you make back to the market.
They can work better on daily charts, but then so does S&R + trendlines.
If however you use them in a non standard way in conjunction with other methods they can work:
Triple MA strats are slightly better than dual MA strats - not by much though.
They can give reasonable entries, but exits are usually very poor.
Different ways of using them could be:
1/ After 2/3 losses switch to S&R (or stick to S&R in the first place...)
2/ Take the MA entry and use a trendline break as exit or fixed target price
(again you may be better off just using trendline breaks in the first place...)
3/ Reverse the signal - when ma cross says short go long - with certain
severely laggy MA setups this can work surprisingly well in ranging markets,
which as Paz said, is the majority of the time.
4/ Can be a reason for trade within an automated strategy - again best used in a non standard way.
Basically in a nutshell - all indicators are absolute crap when used in the standard way they were intended to be used.
Used in a non standard way, indicators can have their uses - its up to you to experiment
TBH though, you would be far better off just using support and resistance and trendlines.
Thats unless you have a specific reason for wanting to use MA in an unusual way, as part of an alert / automation strategy.
Short answer - absolutely no way, as others have said, they are too laggy, can give too many
vague signals and in ranging markets they will give any money you make back to the market.
They can work better on daily charts, but then so does S&R + trendlines.
If however you use them in a non standard way in conjunction with other methods they can work:
Triple MA strats are slightly better than dual MA strats - not by much though.
They can give reasonable entries, but exits are usually very poor.
Different ways of using them could be:
1/ After 2/3 losses switch to S&R (or stick to S&R in the first place...)
2/ Take the MA entry and use a trendline break as exit or fixed target price
(again you may be better off just using trendline breaks in the first place...)
3/ Reverse the signal - when ma cross says short go long - with certain
severely laggy MA setups this can work surprisingly well in ranging markets,
which as Paz said, is the majority of the time.
4/ Can be a reason for trade within an automated strategy - again best used in a non standard way.
Basically in a nutshell - all indicators are absolute crap when used in the standard way they were intended to be used.
Used in a non standard way, indicators can have their uses - its up to you to experiment
TBH though, you would be far better off just using support and resistance and trendlines.
Thats unless you have a specific reason for wanting to use MA in an unusual way, as part of an alert / automation strategy.
S&R Hmmm. Often by the time a market comes back to a support or resistance it has had its move and it probably has already reversed. How does one differentiate between su&R that is going to fail or the ones that will not. I appreciate its not easy, but any pointers??
intradaybill
Well-known member
- Messages
- 358
- Likes
- 14
MAs do work but only for very experienced and disciplined traders.
EminiPicksDotCom
Junior member
- Messages
- 28
- Likes
- 3
Dont get discouraged. Everything works but not all the time. Trading is more figuring out what works for you and having the discipline to follow it.
As with anything worth doing. It is going to be hard and anyone that tells you that it is easy has never traded consistently profitable in there life.
The first step to trading is figure out your risk tolerance and move from there to figure out a trading style that works with that.
For example, i could give you a 90% winning system that guarantees profits but has a too much risk for your personality and you will fail miserably and blow your trading account.
Too many people try to find a way to trade via systems or indicators before they even know the type of trader their mind is wired for.
Their are no holy grails and set it and forget it systems.
Hope that makes sense and persistance and discipline are key to being successful.
Anything else is just blablabla. I trade pa and supply and demand and works for me but it might not work for you.
G
Lead, follow or get out of the way.
Price action is key for any strategy IMO. Know exactly what your entry trigger will be once your setup is in place. For example washouts of lows and false upside breakouts are very powerful and will stop weak holders out.*
*Then of course they will post on internet forums saying how their SB company hunted their stops and does anyone know of a different company that doesn't do that.....
enragedcow
Active member
- Messages
- 211
- Likes
- 15
an EMA tends to be profitable on eur/usd but it has MASSIVE drawdowns
i guess if you had a huge account and the guts to ignore seeing your account almost blown but keep trading it's a winner
combine it with other things like support and resistance areas, consolidation patterns. special numbers (like 1.3000/1 eur/usd) and it becomes a lot more powerful
blindly trading an EMA is likely to lead to losses
blindly trading anything is likely to lead to losses lol
trading is like meteorology, there are so many things that affect the market that really you just have to find patterns that in the past have resulted in a certain event and identify those patterns please note, this does include patterns you see in indicators such as bearish/bullish divergence etc
i guess if you had a huge account and the guts to ignore seeing your account almost blown but keep trading it's a winner
combine it with other things like support and resistance areas, consolidation patterns. special numbers (like 1.3000/1 eur/usd) and it becomes a lot more powerful
blindly trading an EMA is likely to lead to losses
blindly trading anything is likely to lead to losses lol
trading is like meteorology, there are so many things that affect the market that really you just have to find patterns that in the past have resulted in a certain event and identify those patterns please note, this does include patterns you see in indicators such as bearish/bullish divergence etc
safvan
Established member
- Messages
- 515
- Likes
- 34
In order to develop a successful method you need to have deep understanding of how price works. The support and resistance terms can only be understood if you have spent time studying charts and specifically how price behaves.
If you understand price behavior you would understand breakouts, pull backs, momentum, value, S&R and thousands of other phenomenons. They all spin out from those price bars moving up and down and sideways.
You spend countless number of hours studying price action and then form your own thinking by studying others.
Think of it as starting a new business. You obviously study your competition (eg other traders,books) and then go through experience of running it yourself (your losses are your costs and your main aim is to increase revenue and reduce costs). No one understands your own business better than you. If you are continously looking at others for solutions to your business problems, perhaps you should not be running your own business instead look to work for someone else.
How would your run your own restaurant or bar or a pizza shop? Think about that and then move on with your research.
Form your own thinking. Get ideas from others but stop relying on them to put food on your table.
If you understand price behavior you would understand breakouts, pull backs, momentum, value, S&R and thousands of other phenomenons. They all spin out from those price bars moving up and down and sideways.
You spend countless number of hours studying price action and then form your own thinking by studying others.
Think of it as starting a new business. You obviously study your competition (eg other traders,books) and then go through experience of running it yourself (your losses are your costs and your main aim is to increase revenue and reduce costs). No one understands your own business better than you. If you are continously looking at others for solutions to your business problems, perhaps you should not be running your own business instead look to work for someone else.
How would your run your own restaurant or bar or a pizza shop? Think about that and then move on with your research.
Form your own thinking. Get ideas from others but stop relying on them to put food on your table.
Last edited:
MA, TA , cannot "work". All they do is give a historial of what has happened before. which gives the trader a basis for making a decision.
The sooner the trader realises that his trade is not doing what he expected and gets out with as small a loss as possible, the longer he will last.
Do moving average trading systems work?
Short answer - absolutely no way, as others have said, they are too laggy, can give too many
vague signals and in ranging markets they will give any money you make back to the market.
They can work better on daily charts, but then so does S&R + trendlines.
If however you use them in a non standard way in conjunction with other methods they can work:
Triple MA strats are slightly better than dual MA strats - not by much though.
They can give reasonable entries, but exits are usually very poor.
Different ways of using them could be:
1/ After 2/3 losses switch to S&R (or stick to S&R in the first place...)
2/ Take the MA entry and use a trendline break as exit or fixed target price
(again you may be better off just using trendline breaks in the first place...)
3/ Reverse the signal - when ma cross says short go long - with certain
severely laggy MA setups this can work surprisingly well in ranging markets,
which as Paz said, is the majority of the time.
4/ Can be a reason for trade within an automated strategy - again best used in a non standard way.
Basically in a nutshell - all indicators are absolute crap when used in the standard way they were intended to be used.
Used in a non standard way, indicators can have their uses - its up to you to experiment
TBH though, you would be far better off just using support and resistance and trendlines.
Thats unless you have a specific reason for wanting to use MA in an unusual way, as part of an alert / automation strategy.
Nice answer, I use pure naked charts and candles to trade with but if I am feeling lazy I have a MA crossover template that I use to give me a quick heads up for a decent trend reversal.
I added images to explain, I do my trend and SR analysis manually and use the higher timeframes for direction.
Attachments
Last edited:
Similar threads
- Article
