What are your views?
and yours?
I’ve recently did a backtest using a crossover method, and I realized it has becoming increasingly unreliable in recent years due to heightened market volatility
I’m not too sure about a price breakout strategy.
MA crossover generally speaking is not a good strategy to enter the market, some times it may help setting your bias.
I do not know what the price breakout strategy is.
An example would be the turtle system, price breakout of XX period high/lows, enter in that direction. I personally think it might yield better results, but because of the limitations of my backtesting (I’m doing it manually), it’d be better if I can have someone point me a right direction.
I’s suggest you go in a totally different direction
You’ve identified the problem with MA crossovers, the problem with price breakouts is kind of similar, you get ‘false’ breakouts which will eat your profit, you’ll get whipsawed, go one step further and look into price action strategies, i.e. you need to be able to read the price behaviour at these ‘breakout’ areas, how price reacts to S/R levels, as opposed to if prices reaches X then do this.
I have found that MA cross systems have a much higher success rate, HOWEVER most of them are delayed indicators and the gains are often far less than any breakout strategy that I use.
I tend to use a couple of different systems and mix and match depending on; the markets, recent success rate, personal mood etc etc…
Using a pure crossover strat vs a breakout strat based on pure PA. i would go with PA based system but i am biased. If your using the crossover among other things of which PA, S/R, FIB or whatever other tools you want to use then i would go with that one because you would have more trading opportunities than just playing breakouts. But personally I would never guess, i would back test both of the systems, compare the data then trade the best one live and check the results. Thats what I always do anyway. I this game, guessing and opinions i shy away from.
Actually I’m more interested in a mechanical system. I may be wrong (and do correct me if I’m wrong), I think price analysis requires a little discretion and it’s not purely mechanical. I’m interested in both MA crossovers and breakout strategy because they’re mechanical in nature and does not need the trader to actually use his own opinion to decide whether should a trade be taken or not.
Would be really great if more people can share views. Thanks.
Sorry, this probably isn’t the answer you’re looking for but… I think you need an understanding of how the market moves, price action, S/R areas, trend bias, ADR, etc before you can cook up a successful mechanical method.
For example, trading the London open on 30m charts with a 5ma cross of the 10ma or a 20 bar break might be a successful method. Trying the same set-up during the Asian session would most likely be a disaster.
A successful mechanical method is usually developed from the opinion, point of view and experience of the trader.
thanks!
I’m not a huge fan of trading MA crossovers. I’ve tried trading using a demo account and got burnt quite badly. Lots of false signals, especially in a ranging market. You’d need to use some sort of filter to avoid ranging markets.
I really like the MA crossover system… its so simple… maybe too simple?
For me, back testing different fast/slow moving averages with an EA showed that EMA works better than SMA. Time frame is also an important factor.
Then there is also Perry Kaufman’s Adjusted moving average, which accounts for whipsaws and things like that.