Agreed but MA crossover can be used as one of the “5-7 requirements” to look at risk/reward - It is used in professional technical analysis. Yes, you cannot simply open a trade when one line crosses another. I will certainly be looking for further confirmations before risking my money.
Have a look at Moving Average Envelops
Try to incorporate this into your current MA system with further confirmations like RSI and see how you do.
Good luck!!
Definitely a MA crossover can be used as an enhancement to a trade.
Only problem I’d argue is that you’re going to be subject to late entries and exits.
“Have a look at Moving Average Envelops
Try to incorporate this into your current MA system with further confirmations like RSI and see how you do.”
No thanks- I’m comfortable with my current strategy and don’t need any more distractions on my charts. :).
You can probably build a decent strategy though with MAs and RSI.
I just prefer what I mentioned above already and am not looking to change anything.
i have been looking at ma s recently and just need an alert to catch crossovers. cant program scripts or indicators so if you know any that might apply it would help.
I love maths and will be starting a 4 year degree in it soon, but I just don’t know where to start when it comes to quantitative approaches. For more common approaches, there are resources like Babypips to help you learn. But, if you want to develop algorithms, there are far fewer learning resources that explain things in an understandable manner. If you have an advice regarding where I can learn more about that sort of thing, I’d be very happy to hear it.
That seems to be a common problem for most people. Personally, I’m not worried about entering a trend late, provided it still has steam. Obviously a later entry means less room to profit, but I’m more concerned about consistency at the moment.
The crossing of two MAs definitely does signify something - it signifies that price has, on average over a certain period, risen or fallen more than it has, on average, over a certain other period.
MAs do exactly what they’re supposed to - they describe how price has changed [I]on average[/I].
The problems come when traders try to treat them as signifying something other than this, such as reversals or trend changes. But if you simply want to know what price has done on average over a period, then you can’t beat an MA!
Crossover systems can work well in markets that produce strong, sustained trending moves, but tend to perform poorly in mean-reverting markets. Markets tend to exhibit trends in the longer term (due to global macro factors), and regress to their means in the shorter term where a lot of price change is simply noise. So . . . A good way to employ an MA is often as a long term trend filter for a shorter term mean-reversion strategy.
Hope that helps!
Nick
Hello,
Have a look here for plenty of quant info from people in the industry: quant.stackexchange.com
It’s not a “discussion forum” though, and nobody there is interested in chit-chat, so make sure you read the guidance and submit clear questions!
Nick
Thanks again for the help. I like the way you’re currently using your 24SMA to quickly define the market environment, sounds like a neat little idea that I could implement myself. Any particular reason why you chose to use a 24 period MA?
At the moment, I’m leaning towards using momentum as the corner stone of my system - more specifically, divergences. Do you happen to know of any good books on momentum trading?
I understand what you’re saying with regards to price action. In my (little) experience, I’ve often used indicators to help me decide whether to go long or short, and then PA to help find a more specific entry point. With exits, I’ve found that more technical indicators leave it too late to give the signal.
But with purely mechanical systems, is it not a completely objective matter as to whether they work or not? I mean, if there is no subjectivity regarding the systems rules, then (theoretically) every trader should see the same result using it?
Thanks for the help. I actually visited that forum a little while ago. I posted a thread asking where I could learn the basics of quantitative finance and my thread was removed with the message “This is not a discussion forum”.
Just realize that it’s commonly accepted that the majority of currency pairs (and the most liquid ones @ that) are in a phase of range-bound trading, not a “perfect” trend.
Additionally, another misconception is that you always need to trade “with the trend”.
Trend is really going to be defined by how far back a technician decides to scroll their chart back- think about it.
By the time the average new trader has identified a trend, a rally @ the top of it and is comfortable to put a position on, the professionals have been working on unloading their inventory in the markets, in preparation for a markdown (i.e. reversal). Just be careful is all I’m saying- r.e. “I’m not worried about entering a trend late”. That should be your #1 concern, because it directly impacts your consistency.
I built profiles for GBPUSD, EURUSD,NZDUSD, AUDUSD,USDJPY, USDCHF, USDCAD,EURGBP on 60min, 30min, 15min and 5 minute time frames. I start with 1 hour time frame profile scan to note whats trending and/or ranging from above currencies. I drop to 30 minute profile to confirm 60 minute reading and apply the applicable trending or range strategy.
I found that the 24 simple moving average applied to close, give the most accurate signals for trading on 30 minute time frame. Below is how I arranged the profiles
Nice work here GP… just curious, how long did you test out this framework, forward or backtest?
Thank you. I’m not sure what you mean by framework. Please explain
Gp
I’ve been using my ema strategy for about four months and have doubled my demo acc. Just this week I got 230 pips. I think it’s simple and affective. The exit is the hard part so I just chase my profits and move my stop loss up to stay about 20 to 50 pips behind. That seems to be working well. I use 5 8 and 15 ema. On the daily chart and use the 4 hr sometimes to get in at a good time.
I think the kiss method works on most things in life not just trading.
The system i guess
The system I use is based on VSA principles, Price Action, fundamentals, trader sentiment with a strict set of rules. I continually test to look for improvements as well as always looking for information that helps me be a better trader.
I consider myself an opportunity trader. Which simply means I don’t scalp, day, swing or position trade. I look for the best opportunity and analyze it based on my trading method and rules and execute. I review after every session looking at what I did right and or wrong then put findings in my journal.
My trading session is based on one live trade and I’m usually finished with it by London close. The majority of my day is spent practicing my trading method and money management with a demo account, monitoring the trade I took, trying to learn new things, taking notes for review at the end of the NY session. I believe the more you practice the better you get.
Hope that better answer’s your question
Gp
Answering the original question. Last year the Aussie took a battering and went down 1200 pips in 1 week the collapse started with an MA crossover the cross over signified a sell signal.
These strategies suit longterm trades rather than short. So MA crossovers on a daily chart indicate a serious change in trend and confirm perhaps a change from a bear market to a bull and this becomes the longterm trend and price will tend to stay below or above the MA for some time.
So in short it does work it is just how you use it that matters.
Hi just reviving this thread. I’m trying out a MA crossover strategy for entries only. I use a 5 and 8 ema close, 13 sma close and a 50 ema close. When 5 & 8 cross over 13 I look for a buy if price is above 50. I apply the opposite for shorts. I look only at the 4H chart to avoid a lot of noise. this method does not provide many intra day signals but the ones it provides can be very accurate and run for a very long time. i look to take profit based on supply/demand, pa or 4h candle closing. But as long as price is above the 50 line (for longs) and below 50 (for shorts) you shoud not try to exit or trail the stop (cause price always pullsback and could stop you out). As soon as price moves in ur direction you could move stop to entry plus 1 pip so no signal is ever a looser. Pls give this a try and post your thoughts. I’m forever eager to learn.
Each strategy you are using for analysing the market will not hold forever. The moving average strategy will just have success for few months or longer but there is a period that you should find other ways to find your entry or exit level. So, every day you need to be concentrate to identify when this method will have an end.
