Moving Avgs crossover

[Finlayson]

Stevet,

I agree with a lot of what u say, as in price time & vol being the mian thing to trade, as I do, I only use a couple of MA's as a guide which does help. I also agree that the best way is to trade for daytoday/week to week profits, as I believe, for me, this is the only way if wanting to make a living at it......my personal target being +50 pts a week.then I can gauge my life round that.

I will admit I dont make 100K p/year yet... obviously a nice target( though this is down to my self -belief & something I have to overcome to get there...& I will) ...fair play to u for making this, u r obviously a good trader.

I always use a protective stop & cannot see the problem with this. so I dont quite know what u r trying to say about the ''relying on stop''........I dont think I rely on one but wouldn't want to trade without one...........could u elaborate on this as I dont quite understand what u mean

regards

Jay

 

[stevet]

and just so there is no confusion

for fun and diversion

i love technical analysis with a passion - and i still look in wonder as markets hit support and resistance levels, all types of smas, fibonacci retracement and extension levels, the way markets will follow elliot wave moves, how a market can perform with gann, how geometric patterns form and repeat over and over, and all these things happen each and everyday in all markets and in different time scales form ticks right though to years

and especially amazing is how guys with quills hundreds of years ago and one particular russian this century, spotted and forecasted markets, political and economic cycles - with short time lengths to 100s or years

but for me all that stuff is a whole different deal to trading each day to make a buck

 

[stevet]

JayGE

yep, sorry, kinda hard to get it all in print - but that is important so i will elabortate - i would say you either need your finger on the buttom at all times to close a position or have a stop in at a point where normal market action is not gonna take you out - but a point where u know that if get taken out - the **** hit the fan anyway - and best u r well out of the market

but it is important to understand , that your stop only only works if someone else is prepared to take the trade and by extension, you could say that at the point your stop got hit was actually the point you should have been taking your own trade

because of electronic trading, the real dangers of cascading stops is one very few understand, and scares brokers to hell and back - and when that happens - and it will at one point - the result will be for some armegedon

so stops is one thing - but you might also want to think of a stop as also just a point u choose to close a trade if u feel the market is not going your way, as well as a safety level

and markets absolutly have a "memory" - but its short term and first you trade it, then u dont trade against it - and then its gone!

 

[Finlayson]

Stevet

Thanks, yes see what u mean

I must admit, on the long road to learning how to trade profitably, the issue of stop's can be a challenging, but important one.

it has taken a long time to tip the balance of having faith in my decisions over the concern about a stop.

thanks for the reply

regards

Jay

 

[Grey1]

If you want to save yourself time and cash look no further than those indicators with predictive capabilities such as OB/OS oscillators and not any kind of MA.. Moving averages donot predict the market however they teach you discipline and make your trades more mechanical ,

Use OB/OS in multi time frame .. with longer time frame supporting the shorter ones..
Chart 3 levels of RSI ... i.e 3,8,21 known as FIB PEAK on a smallest time frame for your entries.. ( When all three RSI 's are OB or OS and turning at the same time then you have far better chance of reversal)..

I no longer use any Kind of Indicators as I see the market as a social system and not a Complete Mathematical system but if I did use any TA indicator it would be the one I explained above..

 

[frugi]

I have a system that has produced x points of profit since 1/8/03 from 13 round trips. Max consecutive loss has been respectable. Individual losses are obviously always limited, though there is no limit on the number of consecutive losses.

I am wondering how, if at all, the probability of the system achieving another positive return over, say, the next three months is affected by its past perfomance?

In other words, if a coin comes up heads seven times in a row the chance of heads on the next flip is still 1/2. Would the same be true for a trading system or do you think it is more a matter of conditional probability, i.e. past performance will affect future performance?

As I have been led to believe that no system works for ever I tend to agree with the latter so I am wary of continuing to use the system. Had the results for the last 3 months been poor, however, I'd perversely be more inclined to use it for the next three as I'd think it, having suffered a bad patch, was somehow due a spell of positive returns.

Is there any maths to this or is the whole idea of a system working or not working totally random and unpredictable by past events?

I've confused myself now and am not even sure I'm asking a vaild question here...ah well!

 

[Grey1]

Fugi,

The chance of the next toss up will be ½ .. This is an INDEPENDENT EVENT ..
What about the market? Well we all know when market gets Over Bought or Oversold then the chances of reversal increase indicating some kind of a DEPENDENCY, How ever even though that market does indicate some kind of a DEPENDENY but the edge is so very little that most researchers now believe there is little edge gained by any kind of analysis.. ( this is why it bothers me guys using a simple MA strategy or even complicated strategies come up with claim of 80% edge over the market.. Do they realize that if any one had ONLY 5% edge would be trillioners .. How much edge do you think CASINO’s have ? around 3%

So how do we explain those traders who beat the market time and time again ?....

Well they have that little edge ... Same as those who play black jack .. those who have the brain and can card count they beat the house time and time ...

why is that NASA scientists still looking for pay cheques instead of playing the market for billions ?.....

Simple .. They can't beat random events... Rocket scientist or not they do not have what it takes to beat the market , even though they might be excellent mathematicians..


So who should be in the market

1) those who can have access to inside info .
2) Brokers
3) Seminar/Training course guys.. POST EVENT ANALYSTS... loads of $$$ to be made I am telling you .....
4) those who feel can be amongst that top 5%
5) Dreamers

 

[madasafish]

Fascinating thread.

No I do not use MA crossovers to trade..BUT

If you plot a 9 bar channel (hi/low) you can make very reasonable monies by:

going long when price >9ma low
going short when price <9ma high

and of course trading with the trend.


After all that's what markets do when they are not trading sideways..

See the ttached 1 minute DAX chart (works with any index or timeframe.. the red lines above are 9ma high. the green lines below are 9ma low, the bars hi-low background are colour coded green above 9ma, red below.

With a few other aids, great for trading DAX..and works equally well on ES in 2 minutes..

 

[Grey1]

mad,

My dear friend I did not mean you at all.. I meant most software vendors who try to flog strategies to new traders for a FEE..

We are all in the same boat and we should protect ourselves from predators...

One would learn by losing .. This way he would never forget how to avoid loss..... Grey 1

 

[Fluke]

Gray1
Your RSI periods above 3,8,21.Do you mean 8,13,21,because your other recent post recommended 8,13,21.I have set these up on my Sharescope charts.
will you kindly confirm,many thanks.

 

[Grey1]

I do appologise.. yes 8,13 and 21 these are Fib numbers ( 8 + 13 ) =21

 

[Fluke]

Gray1.
No problem lol.

 

[The General]

Frugi,

For what it's worth, here's my opinion:

Re: Independant Events:

Each trade/time fram cannot be considered an independant event purely because of the fact that people start saying thigs like "If previous support of 25 holds this time, I'll buy". These are not statements which support random walk theory.


Re: Past versus Future Performance of systems:

At the risk of sounding obvious, I would much rather trade a system that has made 55% winning trades on 1000 trades entered over the last 6 months than one that has made only 10 trades and all winners.
The reason is simple - the probability that the system @ 55% win rate does not hold in the future is fairly small in comparison to the probabilty that the 100% system breaks down being fairly significant. After all, a system which (ultimately) is 40% profitable can have 10 winning trades and just be a fluke.

As a general point:

Larry Williams (10k into 1.2 Mio in a year) traded at (on a daily level) around 52% accuracy. What he was able to do of course was fairly accurately estimate the expected odds and hence put more on the line on such occassions (and before anyone replies stating it, I am aware that it is an over simplification).

Put simply, if you can trade at 55% probability for 1000 trades, what do you think your chances of coming out ahead are (assuming for simplification that win = one and lose =1 ) ?

Maybe I'll post the answer tomorrow.

Cheers,

The General.