Hi everyone I’ve been trying to build a system around moving averages. I use the moving average cross for my buy and sell signals, I use a 5 ema and a 13 ema on a daily chart. I am working on adding some other indicators for confirmation of the trend, I just had a couple questions. I noticed the ema cross gets you in on a trend late and the exit leaves a a lot of pips on the table. Does anyone know a way to make this system more reliable. Also James said ema cross’s are the money suckers of the century can some explain why it is. From a little back testing I see that ema’s would have gotten you in on some pretty big trends, so how is it not justifiable. I am caught in the middle right now some people say the ema cross is a good indicator others say it’s crap. Some feedback will be gladly appreciated.
moving averages are by definition a lagging indicator… which is why you get in late.
most any moving average system i’ve ever seen isn’t profiable in the long run without good money managment and stop placement and stop movement.
You might want to start looking at candlestick patterns and trading pure price action if you don’t want a lagging indicator of future movement. tymen1 has a thread in this newbie section he just started that you might want to take a look at.
I know it lags, this is how i set up my trades I position size my trade. I only risk 2 percent on any given trade. I set a stop about 50 pips away, I noticed that you might make a huge profit but you lose it because yo have know clear exit strategies with the emas. I decided to open three lots first lot takes profit at 50 second at a hundred and the third will run on and the stop will be set at break even. Do you guys this sounds good in the long run. I am going to take a look more at the candlestick patterns. Thanks a lot guys
Also James said ema cross’s are the money suckers of the century can some explain why it is.
[B]To kent123 :[/B]
The reason for the above is that they are lagging indicators.
I started out with ema crosses and made loss after loss. Slowly I graduated to a winning approach - the immediate data system ie candlesticks.
They are simpler to learn than you think. (3 and 2 candle patterns only).
Save yourself the heartache and graduate now.
Have a good read of the following hyperlinks, then have a read of my thread on Candlestick charting - in it I show one chart where even the much venerated MACD looses.
Candle Sheds More Light Than The MACD
Thanks guys am gonna read over the candlestick thread and let you know how am doing.
Good for you Kent123 - all the best!