The finest in trend trading

Beginner Questions
590

I will be the first to admit that it is lagging, and I don’t prefer indicators for that very reason.
However I disagree with it being no different.

The separation of the red/blue averages, and the spread of the averages allows us to discern the character of the trend as I have shown in my opening posts on the GMMA.

see post #200 page 20
#202 + #205 page 21
especially #252 + #253 page 26.

Like all the others it looks great in tutorials on pre selected charts where it all fits nicely.
It is very different in live trading.

This is not the way I am presenting it.
Later we will be looking at live trades using it!! :stuck_out_tongue:

I could post a thousand pictures of charts that show this indicator where the bands have just opened up, do you open a position based on this ?

We open based on the crossover of the MMACD.

If you think so, I could show you a thousand more charts where the bands closed back in again just after they opened up because there was not really a trend starting.

I have already explained this and shown charts to that effect.
The MMACD can cross back quickly and give you a loss.
It does happen and sometimes several losses in a row occur.
But then one good trade and you kill the losses!! :smiley:

If you think so I could show you a thousand more pictures of charts where the bands opened up seemed to be staying open then suddenly converging again because there still was not a long trend.

AS ABOVE.

How long do you wait after the bands look good in this indicator before opening a position based on it ?

You don’t.
You use the MMACD crossover.

When is it safe to assume the trend this indicator is showing will continue ? I can tell you the answer to that question. Never. All it can show you is what has already happend not what is about to happen.

I will disprove you when we do the live trades!! :stuck_out_tongue:

591

Darryl Guppy does not use a 200 ema line in his work.

592

The trend line [U]does not tell us where the price is going[/U] - a break of the trend line could occur at any moment.

After all, the line is drawn after the price action, not before it.

But as long as the price action stays within the bounds of the trendline, we are in profit mode.

Another way of looking at a trendline is to call it a “[B]profit line[/B]”.

If the price follows that line, we make and stay in profit.
If it breaks that line, it may be wise to get out, otherwise our profits will disappear (and maybe do so quickly).

Hope this helps.

593

Just read through the entire thread. Yes, there are some haters, but please don’t let that distract you tymen. The content and teaching style in this thread is superb. Thanks for taking the time to put it together.

594

very interesting, thanks that definitely clarified some things :slight_smile:

595

[B]TOPIC 8
TRADING WITH INDICATORS

IMPROVING THE EFFICIENCY OF TREND TRADING[/B]

In some of the trend we do, we can stay in for a very long time and make very few pips.
I have already shown this to be the case in a prime example, see post #516 page 52.

Let us look at another case.

NEXT POST

596

Here we see a horrible case of inefficiency in this 20 minute chart of the Cable >>>

1024×640

The amount of time the MMACD has been in positive territory before returning to zero is quite satisfactory - we expect to make a good profit.

However, the reality is that we make a loss of 22 pips between the entry and exit!! :eek: :eek:

What is going wrong?? :confused:

Nothing is wrong.
It is just that the method is very inefficient right now!!

So a major clean up of this method is called for!!
…Yep!!

And that is what we are going to do!!

Look at the point T in the chart.
Now that is a nice exit point.
…a profit of 37 pips between the entry and point T.
…and half the time spent in the trade!!

Time spent in the trade is important - we do not want to spend useless time watching our profits diminish again.

597

Another example of gross inefficiency in this daily chart of USD/JPY >>>

1024×640

Look at this short trade.

Would it not be better to exit around point P rather than the standard MMACD exit on the chart?
If we did exit at P we would spend about half the time in the trade and gain substancially more pips!!

So how do we get to exit at points like P? :confused:

598

NOW you´re getting my attention again:D

macd is very similiar to a Ma crossover. if we wait for another crossover to exit it will be hard… but if we wait for where the distance between the Ma is maximal maybe it will be better… isn´t it???

599

[B][U]EXERCISE[/U][/B]

The chart above has numbered candles at the entry and exit.

[B]Questions[/B]…

  1. Give the correct candle number for the entry and the correct candle number for the entry.

  2. Is this a short or a long trade? Why?

  3. Do we make a profit or a loss?

600

Nope!!

Sorry, that will not work!! :smiley: :smiley:

601

In solving the efficiency problem, I am going to introduce you to the rhythm of life :smiley: :smiley:

1023×558

Now thats cryptic eh!!

I wonder if any readers here can see what I am driving at?

I should leave you in pain and suspense ( :smiley: ) by posting the answer tomorrow but I will wait a few hours and then post the answer!!

602

yes, i’m looking forward to that part :slight_smile:

way above you tymen, philippines :slight_smile:

603
  1. enter open C3 . exit open C8
  2. short trade, GMMA cross south of 0 line
  3. after initial drawdown exit with small profit
604

ahhh!!

Nice and hot/humid there.
The philippines is one place I would like to see. :slight_smile: :slight_smile: :slight_smile:

605

Enter at the open of Candle 3 and exit at the open of Candle 8 because they are the first candles after the MMACD crossover.

It is a short trade because the MMACD crosses the zero line going down.

We make a small profit in relation to the bigger profit we could have made if we had exited earlier.

606

Enter at 3, exit at P
Enter at P and exit at 8. :slight_smile:

Ooops forgot to say Breath in, breath out. Breath In, breath out…

607

that rythm of life looks like a bollinger band. Also looks like alternating sessions. Asia / Europe…

611

We have a pile of bricks, we know that we are going to build something. But if you haven’t seen the plan how can you argue that the design is wrong

614

Entry on C2, Exit on C8

It’s a short trade and it makes a loss:o