hey guess … iv been trading for about a year and half and i have had up swings and down swings over the year and a half … my question is he timing of the trades … my indicators im using are 21-55 moving averages that show the trend and 5 and 8 sma and ema and i use the mcad at 21 55 8 as we speak i am watching the gbp/jyp … the mcad is pointing up and the bar has not yet crossed . but it will more than likely cross next month now with my 21 55 has not crossed just yet but like the mcad it will next month on forex factory site … the gbp news has mostly been fairly positive all week and should be next week also … but i do use the monthly charts by the way … at what point should i pull the trigger and go long on the pair … should i wait til he 21 55 cross and he mcad cross into he positive or should i just pull the trigger now what
The question you’ve asked has a lot of implications. You understand the problem which is ‘timing’, getting a clear answer may be hard. Even though you’ve given us a lot of input on your current screen there will be lot of other factors, which is probably why you’ve asked for fundamental input.
To get a better handle on the complexity of the timing puzzle Google: Optimization of the Trading Rule in Foreign Exchange
using Genetic Algorithm
Here is the Abstract from that paper.
ABSTRACT
The generation of profitable trading rules for Foreign Exchange (FX) investments is a difficult but popular problem. The use of Machine Learning in this problem allows us to obtain objective results by using information of the past market behavior. In this paper, we propose a Genetic Algorithm (GA) system to automatically generate trading rules based on Technical Indexes.
Unlike related researches in the area, our work focuses on calculating the most appropriate trade timing, instead of predicting the trading prices.
It’s a pretty interesting read. I’d also recommend - Optimal Trading Strategies: Quantitative Approaches for Managing Market Impact and Trading Risk
To answer your fundamental question, I’ll do it indirectly (I can’t give you trading advice). When it comes to exchange rates there are a couple of thing I focus on. Primarily the relationship between growth and inflation for each country in the pair. It may be something to look at as an overlay for your technical analysis. Some of that will depend on how you define “long-term” though. I will hold a position for weeks/months. Some consider long-term a few days.
It’s great to know there is another long term investor at this forum like me. But what I don’t get is why you are using moving averages? Why don’t you set your MACD at normal settings the platform provides you?
I use weekly charts and the only thing I have on my chart is the 200sma trend line. I have a MACD indicator with normal settings for entry and exit point and I use ATR for stop losses.
Still if it’s working out for you stick to that method.
Yes you should wait until 21/55 crosses because you can not predict the future. If I know it’s every week positive and it looks like it would cross but it never crosses and you go long then you’re a bit screwed so just wait because timing is important like you say. Pull the trigger when they both cross at MACD. Be patient and it will work out
well why i use the 21 55 moving averages is i dont want them to cross a lot … they may cross once a year … amd sumtimes not even that and it shows the trend better … i trade from monthly chart by the way … i cant do intraday or daily
