Excuse My Lack Of Knowledge - Question About Two Charts

[VladaCMC]

Excuse me if this is an obvious question, but would someone be kind enough to answer the following:

The two charts attached are identical except one is Line and other is Candle.

In the first LINE chart, I am interested in catching the crossover of the line AS SOON AS it crosses the moving average. This is marked by the green cross. On the chart that looks reasonable. I would like to jump on a trade as soon as it penetrates underneath rather than wait for the close.

In the second chart, it shows that the highs and lows of the each bar penetrated the average many times before and after the signal I wish to take. These are marked by the red crosses.

My question is this: In real time, would the line pick up these other signals as well or would the only signal I would get be the one marked by the green cross in the Line chart.

Thank you in advance for any help.

 

[Lightning McQueen]

Hi Vlad

As long as your rule for for a valid signal for a cross is a closing bar you should have no probs.

The fact that the price is moving around your signal line is your heads up to maybe watch a lower timeframe to time your entry better after a valid cross.

Good luck with your strategy.

don

 

[nine]

Vlad

Your fear is valid. A real time line chart would repeatedly cross the ma. For this reason move to a candle or OHLC chart and do as don suggests: only take the signal on close of the bar. If you can do a line on close chart which only shows close points then it would have avoided the chop as well.

 

[VladaCMC]

Crap, thanks guys.

If you develop a system and it seems to good to be true it probably is. The system was based on entering right at the cross of the line. The beauty was very small losses with huge profits. If I used the closing bar the losses would increase substantially.

I will try that, but I am pretty sure the system will fall apart.

Thank you again for your replies.

 

[Splitlink]

Crap, thanks guys.

If you develop a system and it seems to good to be true it probably is. The system was based on entering right at the cross of the line. The beauty was very small losses with huge profits. If I used the closing bar the losses would increase substantially.

I will try that, but I am pretty sure the system will fall apart.

Thank you again for your replies.

Can't you reduce your time scale to a minute chart and draw the signal line you want to use from your larger time scale onto it? If you are with a broker an order will get you in the first time. Not so sure with a spreadbetting firm.

Split

 

[dbphoenix]

Excuse me if this is an obvious question, but would someone be kind enough to answer the following:

The two charts attached are identical except one is Line and other is Candle.

In the first LINE chart, I am interested in catching the crossover of the line AS SOON AS it crosses the moving average. This is marked by the green cross. On the chart that looks reasonable. I would like to jump on a trade as soon as it penetrates underneath rather than wait for the close.

In the second chart, it shows that the highs and lows of the each bar penetrated the average many times before and after the signal I wish to take. These are marked by the red crosses.

My question is this: In real time, would the line pick up these other signals as well or would the only signal I would get be the one marked by the green cross in the Line chart.

Thank you in advance for any help.

Clarify your signal, i.e., what is it exactly that you want? If you're looking to enter "as soon as it crosses the MA", then a "line-on-close" isn't going to do you any good. And bar charts -- whether OHLC or candle -- are going to consolidate the tic by tic information you need to see into a single bar. If you're trading this in real time, the type of display used will be irrelevant since you'll see price crossing your MA as it happens. However, if you're testing this setup using hindsight charts in order to determine whether or not it's viable, much less profitable, you'll have to use tic charts in order to determine exactly when price is crossing your MA.

For example, in your "candle" chart, beginning with the first candle marked with a red cross, price crosses your MA eight times in the time span marked by the first nine candles. Avoiding this is what makes a "simple" idea not quite so "easy" to implement. You will mostly likely end up incorporating time, volume, and even spread into your strategy, making the easy strategy more difficult with each added layer.

Db

 

[VladaCMC]

dbphoenix ... Thank you, there may be something there. I'll work on it.

 

[dbphoenix]

dbphoenix ... Thank you, there may be something there. I'll work on it.

If you do, don't get too preoccupied with time. You can trade by time (i.e., a 5m "bar" or "candle") or volume or price or indicator or some other thing. Your solution may be as simple as stop placement.

Db