Moving averages and day trading entry signals

[JTrader]

It has been suggested that moving averages, and especially crossover moving averages such as 10 & 20 period SMA's are no good for acting as entry signals when day/trading because by the time the price has crossed the moving average or by the time the moving average has crossed over, a large proportion of the price move will have already taken place. I understand and accept this view point. Moving averages are good for showing the direction of the trend, and I do want to be aware of the direction of the trend.

Besides moving averages, what alternative entry criteria would you suggest that will enable me to be able to perhaps enter the trade earlier and not miss a large proportion of the price move?

I am aware of bollinger bands but am not sure how effective they are.

Would appreciate some fresh ideas for further research!

Cheers.

 

[DiscoPete]

Hi JT!

Bollinger bands are good but only in ranging markets, so you have to decide when a market is range bound or not. If the market is trending then a SAR could be used as these provide good indicators of a move and will bag you a few pips if you manage to catch the trend.

With a low ADX you could use bollinger bands.
A high ADX you could then switch to SAR's.

OR you could build a API and trade longer term and get those pips with moving averages.

Just my $0.02.


Pete

 

[TheBramble]

JT - you may well get innundated with suggestions, but then I guess that's what you want.

Have you looked at breakouts from support/resistance and especially from channels - which are a special case S/R setup?

They have the advantage of being leading rather than lagging indicators, but you stand more chance of a whipsaw than you would with the longer MAs method.

 

[neil]

http://www.elitetrader.com/vb/showthread.php?s=&threadid=29005

http://www.trade2win.co.uk/boards/forumdisplay.php?s=&forumid=52

That should keep you busy for a while

 

[chump]

JT,
"Besides moving averages, what alternative entry criteria would you suggest that will enable me to be able to perhaps enter the trade earlier and not miss a large proportion of the price move?"

Understanding,anticipication,and money management

Understanding what you are seeing in the price and volume action
at the levels of supply and demand on your chart

Anticipation of what comes next

Money Management to control your risk for those occasions you are wrong


If you get that quickly then you will have done better than I did.

Cheers

 

[oatman]

Look at P&F breakouts
Breakouts are no good unless the market's volatile.
The amount you miss depends how far the breakout move is going.
Is it sideways or is it trending?

 

[adrianallen99]

It has been suggested that moving averages, and especially crossover moving averages such as 10 & 20 period SMA's are no good for acting as entry signals when day/trading because by the time the price has crossed the moving average or by the time the moving average has crossed over, a large proportion of the price move will have already taken place. I understand and accept this view point. Moving averages are good for showing the direction of the trend, and I do want to be aware of the direction of the trend.

Whether MA are any good to act as Entry signals is going to depend a lot on how the market is behaving. Some days MA crossovers can work really well, other days they don't work at all. I guess you need to understand the way the market behaves to get an idea of when to use a specific entry signal/indicator.

As chump said 'Understanding'

I have used 10/20MA crossovers with great success, Ive used Slow Stochastics as an indicator with good results. Some days they work, some days they don't. It is knowing when to use them to make them work that is important.