Grey1
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Frugi,
No disrespect but the only reason the MA has been working is because market been trending and we have the benefit of hindsight.. Is market going to trend in future or not is the KEY to future ...
Moving averages systems produce high number of losers and occasional good winners and are amongst the poorest trading strategies if not the poorest..
I can show you many many trading strategies based on more advanced MA such as Ehler's Adaptive system which fails to produce any acceptable results..
Is there any room for Moving average systems ? To be quite honest NO, .. however if the cross over lets you to trade more mechanical and helps to control the risk of your trade then go ahead..
I am no guru just thought to share my experience
No disrespect but the only reason the MA has been working is because market been trending and we have the benefit of hindsight.. Is market going to trend in future or not is the KEY to future ...
Moving averages systems produce high number of losers and occasional good winners and are amongst the poorest trading strategies if not the poorest..
I can show you many many trading strategies based on more advanced MA such as Ehler's Adaptive system which fails to produce any acceptable results..
Is there any room for Moving average systems ? To be quite honest NO, .. however if the cross over lets you to trade more mechanical and helps to control the risk of your trade then go ahead..
I am no guru just thought to share my experience
reddragon, I suggest you take a look yourself. It depends how you use MAs. There's no magic, no system and nothing is 100%. Anyone who trashes a method has a closed mind. It obviously doesn't work for Grey1 but you'll find a lot of successful traders here who use them.
welshwarrior
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Hi All,
I have found MACD combined with simple MA works extremely well on 5min spot forex (EURUSD in particular) mainly because the trends tend to have more momentum once they get going than the indices - therefore the lagging aspect is ok. BUT the indicator is near useles if it is flatlining. In which you probably won't be in the market anyway. And the other thing of course is, that you would never trade all crossovers - you still have to look at the strength of any move before you can decide the likely potency of the signal - but I think that it is the same for all oscillators.
Great thread to start - loads of traders use this as their primary tool I think - interesting to see what people really think.
toodle pip.
I have found MACD combined with simple MA works extremely well on 5min spot forex (EURUSD in particular) mainly because the trends tend to have more momentum once they get going than the indices - therefore the lagging aspect is ok. BUT the indicator is near useles if it is flatlining. In which you probably won't be in the market anyway. And the other thing of course is, that you would never trade all crossovers - you still have to look at the strength of any move before you can decide the likely potency of the signal - but I think that it is the same for all oscillators.
Great thread to start - loads of traders use this as their primary tool I think - interesting to see what people really think.
toodle pip.
MA's and MACD's are lagging indicators. As such they do not have predictive abilities. They do, however, excel at indicating the trend, or a change in trend.
The correct time to use them is in trending markets, when you will make a mint. In rangebound markets you'll get wiped out on the whipsaws. Unfortunately MA's on their own are not good at indicating the type of market, IMO.
Regards
Harry
The correct time to use them is in trending markets, when you will make a mint. In rangebound markets you'll get wiped out on the whipsaws. Unfortunately MA's on their own are not good at indicating the type of market, IMO.
Regards
Harry
Has anyone looked at the way in March most stocks have reversed and some much more than others. This might be a silly question BUT, as you can tell a lot of 200MA are going to go up in a sustainable way. Can anyone tell me whether this will guarantee a sustainable rise in FTSE 100 equities? I get the impression it will!!!
if you want to make your money from technical analysis, learn all about it and then write a book and/or train people in technical analysis so they can learn to wriite a book or train other people
technical analysis always works in hindsight and its great for party tricks to show people amazing things on charts - but thats it
and if you are relying on stops as part of your methodology - over time - you will get burned
price, time and volume ( and preferably an arb opportunity!) combined with a solid methodology which could provide returns in 100s per cent per annum and used in a disciplined way is the easiest (only?) way to be succesful
if you are trading a methodology which can only make 20 or 30 percent per annum on your trading and you take a 20 or 30 per cent hit - by logic, at best, its gonna take you a year to get back to base
and then your return in the next year is only going to be 10% as you need to make up for your loss year, and your back to break even year
and of course bear in mind that your money base took a 30 percent hit and therefore your returns end up being based on only 70 percent of your money so in fact your potential 30 percent return is now gonna be based on that substantially lower amount
when markets have consolidated at a base, run in narrow ranges and break to the upside with an upside trend - a lot of new different "experts" appear in trading with solid belief and proof of their trading skills - but they all disapear when volatilty hits extremes, and/or markets start breaking down - and then they always give back more than they made
if you are just trading a nest egg for fun in small size, trading is your hobby and u dpnt mind taking losses to make a small possible return - thats another thing and not trading - but real trading is hard work and at the minimum you would want to be making 100K plus - with a regular daily or monthly payout, and so its at least worth thinking about these points as you consider your trading methodology and objectives
i have not spent time working out a bullet proof reasoned argument on the above so dont want to get into a debate about it with anyone who is a hobbysist, learner or part time trader - its just meant to give u something to think about - if it sounds crap - just bin it from your mind
but, if you already get all this and feel you are close, but not there with a successful methodology - let me know - maybe i can help
technical analysis always works in hindsight and its great for party tricks to show people amazing things on charts - but thats it
and if you are relying on stops as part of your methodology - over time - you will get burned
price, time and volume ( and preferably an arb opportunity!) combined with a solid methodology which could provide returns in 100s per cent per annum and used in a disciplined way is the easiest (only?) way to be succesful
if you are trading a methodology which can only make 20 or 30 percent per annum on your trading and you take a 20 or 30 per cent hit - by logic, at best, its gonna take you a year to get back to base
and then your return in the next year is only going to be 10% as you need to make up for your loss year, and your back to break even year
and of course bear in mind that your money base took a 30 percent hit and therefore your returns end up being based on only 70 percent of your money so in fact your potential 30 percent return is now gonna be based on that substantially lower amount
when markets have consolidated at a base, run in narrow ranges and break to the upside with an upside trend - a lot of new different "experts" appear in trading with solid belief and proof of their trading skills - but they all disapear when volatilty hits extremes, and/or markets start breaking down - and then they always give back more than they made
if you are just trading a nest egg for fun in small size, trading is your hobby and u dpnt mind taking losses to make a small possible return - thats another thing and not trading - but real trading is hard work and at the minimum you would want to be making 100K plus - with a regular daily or monthly payout, and so its at least worth thinking about these points as you consider your trading methodology and objectives
i have not spent time working out a bullet proof reasoned argument on the above so dont want to get into a debate about it with anyone who is a hobbysist, learner or part time trader - its just meant to give u something to think about - if it sounds crap - just bin it from your mind
but, if you already get all this and feel you are close, but not there with a successful methodology - let me know - maybe i can help
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Newtron Bomb
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stevet
TA is great in hindsight... that is the whole point to it!
As a TA user i am looking for history to repeat its self, it works for ME and i do this full time, if i traded with fundamentals then i would look for conditions that i found favourable that have yielded well in the past, so what is the difference...? the tool that we use!
Like any business you are trying to put favourable conditions in front of you be it a business proposal thats better than the competition, a winning marketing campaign or in my case to look for conditions which in the past have given good results... what ever the business the business plan for success is the same... do something that has worked in the past or come up with a new concept, i have gone down the road of doing something that i believe will make me money.
TA is great in hindsight... that is the whole point to it!
As a TA user i am looking for history to repeat its self, it works for ME and i do this full time, if i traded with fundamentals then i would look for conditions that i found favourable that have yielded well in the past, so what is the difference...? the tool that we use!
Like any business you are trying to put favourable conditions in front of you be it a business proposal thats better than the competition, a winning marketing campaign or in my case to look for conditions which in the past have given good results... what ever the business the business plan for success is the same... do something that has worked in the past or come up with a new concept, i have gone down the road of doing something that i believe will make me money.
i trade based on tick by tick price moves in relation to time and volume and wait for certain set ups, for example, such as fast moves from liquidity pulls , market maker / specialist manipulation, exhaustion points, inter-market moves or pull backs etc etc
Newtron Bomb
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To direct my comments back to the title... ma's do work and like any aspect of trading they all work some of the time.
MA's need a trend to be useful, a statement of the obvious i know.... so trade them with a market that trends regularly
We've been told by our dads, or even told our children, to use the correct tool for the job, so if you can wait for the next bull or bear trend in stocks or futures then look at a market that trends for this we look to other markets like some commodities, which some would think too risky i my self do not trade them... so what else is there that trends well??? Currencies are renowned for their trends.
I think a lot of peeps find a tool they like and try to fit it to the market they want to trade... we need to look at it from the other way sometimes and find a market that we are happy to trade and find the tool to trade it with.
Just my tuppence worth
MA's need a trend to be useful, a statement of the obvious i know.... so trade them with a market that trends regularly
We've been told by our dads, or even told our children, to use the correct tool for the job, so if you can wait for the next bull or bear trend in stocks or futures then look at a market that trends for this we look to other markets like some commodities, which some would think too risky i my self do not trade them... so what else is there that trends well??? Currencies are renowned for their trends.
I think a lot of peeps find a tool they like and try to fit it to the market they want to trade... we need to look at it from the other way sometimes and find a market that we are happy to trade and find the tool to trade it with.
Just my tuppence worth