TheBramble
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Related, but not the same thing.
The Three Keys
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JTrader
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Yes, i don't quite get this eg. 60-EMA channels on my 5-mins, which relate to 5-MA on 60-mins" etc. which i've heard about a few times. How is this supposed to work?
Are they meant to plot the same thing?
if so in what sense?
does it mean that the EMA will plot at the same price levels on both charts or something?
Or did someone just make this "theory" up and pass it on as fact?
Cheers.
JTrader
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TheBramble
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Well, lets forget for a moment trendie mentions one as an EMA and the other as just a plain old MA, the fact remains, a 60 period MA on a 5 min chart will not (necessarily) give you the same reading as a 5 period MA on a 60 min chart.
So related, in that they are both MAs, but not (necessarily) the same values.
I posted on this topic at greater length recently if you care to do a search.
JTrader
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They can't possibly display the same reading at the same time, as a 60m chart will not show what the 5MA reading was at 15:25 for example, whereas the 60MA can show what the 15:25 reading was on a 5m chart. Sure, the 60m chart will show u the 15:25hrs 5MA reading in real-time, but not historically.
Lightning McQueen
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Just to make this absolutely clear for this thread 
If we are looking at a 5 min chart with this method the same 5 sma will be used, the only difference will be the vertical shift will need tweaking as the width of the band will widen as the timeframes shorten.
Tony, your input is appreciated, I had read that post earlier, most illuminating, I had never thought to look at it like that.
I think trendie is just making the point that our methodology is not too dissimilar
If we are looking at a 5 min chart with this method the same 5 sma will be used, the only difference will be the vertical shift will need tweaking as the width of the band will widen as the timeframes shorten.
Tony, your input is appreciated, I had read that post earlier, most illuminating, I had never thought to look at it like that.
I think trendie is just making the point that our methodology is not too dissimilar
dbphoenix
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No, they won't, anymore than a 50p daily chart will match a 10p weekly chart. But you were wondering how they are related.
Lightning McQueen
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Any system programmers out there looking in ? I expect this could be a good basis for a multi-time frame algo system, any thoughts? input?
Anyway your welcome to fill yer boots with it, if it is suitable
Anyway your welcome to fill yer boots with it, if it is suitable
trendie
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sorry for taking this off-topic with my 60-EMA remark.
TheBramble has written quite a good post regarding the fact that translating one TF to another does not equate exactly. (3 Ducks thread)
I use my MAs in a more relaxed, discretionary way, so absoluteness of value is not vital for me. for me, its an odds game, so its the overall edge that matters.
There is another post regarding the lagging nature of MAs, and inferring lagging is a fault, but thats not important either.
all this is by the by.
Apologies to LM for the temporay hijack.
back to the 3 Keys....
Lightning McQueen
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Its not a problem trendie ...everyone needs to share and expand on various different views that they hold, that way everyone will benefit as in the threads on FF :clap:
your input is appreciated, as is everyones
Thanks all
your input is appreciated, as is everyones
Thanks all
Lightning McQueen
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I got ignored by capitalspreads so I think i'll give them a miss and not bother, a bit of a blown PR opportunity on their part, maybe
So looks like IG the SB of choice for this thread so far then
So looks like IG the SB of choice for this thread so far then
Lightning McQueen
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Before I do a post outlining my theories of how to measure and take action on the bouncing ball of key 2 which is most relevant to this theory I just wanted to touch on key 1.
Jesse Livermore and a statement in his book on averages, I think it is quite illuminating and very telling, your conclusion may differ.
I like the later book, its not as punchy as reminiscences but it is a far later works, his last word, which for research purposes may give insights into the great speculator that Jesse Livermore was.
It is said that everything becomes clear with hindsight, here are quotes from the book I find most interesting from this point of view, there are many more which I wont go into.
"in the forty years which I have devoted to making speculation a successful business venture, I have discovered and still am discovering new rules to apply to that business."
He goes on to say
"A great many traders keep charts and records of averages. They chase them around, up and down, there is no question that these charts of averages do point out a definite trend at times. personally charts have never appealed to me. I think are all together too confusing. Never the less I am just as much a fanatic in keeping records as other people maintain charts. They may be right I may be wrong."
now call me a sceptic but that last quote is tantamount to saying
"damn I spent forty years wasting my energy on record keeping when the pivotal points were on the chart all the time, all I had to do was plot an average and look. Then go out and get blasted on me millions, and fill me boots with lasses"
As I said your conclusions may be different :cheesy:
Jesse Livermore and a statement in his book on averages, I think it is quite illuminating and very telling, your conclusion may differ.
I like the later book, its not as punchy as reminiscences but it is a far later works, his last word, which for research purposes may give insights into the great speculator that Jesse Livermore was.
It is said that everything becomes clear with hindsight, here are quotes from the book I find most interesting from this point of view, there are many more which I wont go into.
"in the forty years which I have devoted to making speculation a successful business venture, I have discovered and still am discovering new rules to apply to that business."
He goes on to say
"A great many traders keep charts and records of averages. They chase them around, up and down, there is no question that these charts of averages do point out a definite trend at times. personally charts have never appealed to me. I think are all together too confusing. Never the less I am just as much a fanatic in keeping records as other people maintain charts. They may be right I may be wrong."
now call me a sceptic but that last quote is tantamount to saying
"damn I spent forty years wasting my energy on record keeping when the pivotal points were on the chart all the time, all I had to do was plot an average and look. Then go out and get blasted on me millions, and fill me boots with lasses"
As I said your conclusions may be different :cheesy:
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Lightning McQueen
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Time to get a grip with those averages and the why and what we are looking for
We know from observing and historical reference we are looking for the pivotal point of the price
This can be found by sma, in this instance 5 fits the bill nicely we know this by observing what price does at this moving average on an uptrend the bottom of the bar will be touching and in a downtrend the top of the bar will be touching.
If we shift the entry point up for an uptrend and shift down for a downtrend we are fulfilling the criteria of jesses plan for action.
For ages I couldn't work out why my entry point was flat. Every entry I tried under the original simple system went sideways this was because I was trying to enter a trade at the pivotal point not above or below it. very bad, not good and will scare you out the trade real quick as it is not acting as expected, a puzzle for me and many good members here tried in vain to help but to no avail it was not until I read one of Elders books that the penny dropped and the path was clear once more.
Here is a quote from that book that made all clear in my mind of where the price is and where it may go in the short term
Alexander Elder Entries & exits - visits to sixteen Trading Rooms 2006
"Moving averages
Each price is a consensus of value at the moment of a trade. A moving average reflectsan average consensus of value in its time window If price is a snapshot,a moving average is a composite photograph it provides two important messages to traders .First,its slope identifies the direction of the publics mood. A rising moving average reflects growing optimism (bullish), while a falling MA reflects growing pessimism (bearish)
Another important role of MA is differentiating between value trades and greater fool theory.If you buy near the MA you're buying value. a trader who buys well above the MA is in effect saying -"i'm a fool, I'm overpaying, but I hope to to meet a greater fool down the road" There are few fools in the financial markets and a trader who keeps buying above value is not likely to win in the long run, he may get lucky once in a while, but buying near value is a much sensible strategy"
And bingo! the MA banding was born if the price moves into the value area, a position is taken in the market that takes advantage of the explosive movement caused by the sudden realisation that we have left value and a strong directional move is in our favour. we are now being swept along in the trade by the greater fools. the method is now complete.
Hey Lightning Why do people get stopped out so much ?
A good question, the why is contained in the above quote from elders book if the price is higher than the ma it will invariably come down to its pivotal point taking stops out as it runs.
You have now been warned of the dangers of incorrect entries, large wide stops ...the so called give the trade room to breath, which in code means "I haven't a clue where the correct entry is but I know its around abouts here somewhere" with this attitude to trading you are are going to blow your account over the long term.
Remember keep em tight - preserve capital - stay in the game.
That's it, I do hope you can follow it
Next up is FTSE, can I kick FTSE butt, you betcha ...join in next week for some FTSE action.
In the meantime any questions or comments ? i'm not going to be about much over the weekend so be patient and check back
We know from observing and historical reference we are looking for the pivotal point of the price
This can be found by sma, in this instance 5 fits the bill nicely we know this by observing what price does at this moving average on an uptrend the bottom of the bar will be touching and in a downtrend the top of the bar will be touching.
If we shift the entry point up for an uptrend and shift down for a downtrend we are fulfilling the criteria of jesses plan for action.
For ages I couldn't work out why my entry point was flat. Every entry I tried under the original simple system went sideways this was because I was trying to enter a trade at the pivotal point not above or below it. very bad, not good and will scare you out the trade real quick as it is not acting as expected, a puzzle for me and many good members here tried in vain to help but to no avail it was not until I read one of Elders books that the penny dropped and the path was clear once more.
Here is a quote from that book that made all clear in my mind of where the price is and where it may go in the short term
Alexander Elder Entries & exits - visits to sixteen Trading Rooms 2006
"Moving averages
Each price is a consensus of value at the moment of a trade. A moving average reflectsan average consensus of value in its time window If price is a snapshot,a moving average is a composite photograph it provides two important messages to traders .First,its slope identifies the direction of the publics mood. A rising moving average reflects growing optimism (bullish), while a falling MA reflects growing pessimism (bearish)
Another important role of MA is differentiating between value trades and greater fool theory.If you buy near the MA you're buying value. a trader who buys well above the MA is in effect saying -"i'm a fool, I'm overpaying, but I hope to to meet a greater fool down the road" There are few fools in the financial markets and a trader who keeps buying above value is not likely to win in the long run, he may get lucky once in a while, but buying near value is a much sensible strategy"
And bingo! the MA banding was born if the price moves into the value area, a position is taken in the market that takes advantage of the explosive movement caused by the sudden realisation that we have left value and a strong directional move is in our favour. we are now being swept along in the trade by the greater fools. the method is now complete.
Hey Lightning Why do people get stopped out so much ?
A good question, the why is contained in the above quote from elders book if the price is higher than the ma it will invariably come down to its pivotal point taking stops out as it runs.
You have now been warned of the dangers of incorrect entries, large wide stops ...the so called give the trade room to breath, which in code means "I haven't a clue where the correct entry is but I know its around abouts here somewhere" with this attitude to trading you are are going to blow your account over the long term.
Remember keep em tight - preserve capital - stay in the game.
That's it, I do hope you can follow it
Next up is FTSE, can I kick FTSE butt, you betcha ...join in next week for some FTSE action.
In the meantime any questions or comments ? i'm not going to be about much over the weekend so be patient and check back
counter_violent
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Lightning McQueen
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Love the 3 keys pic, great stuff mate.
I'm going live next week with this so as promised to JT, loads of charts, with trade entries, examples illustrating the text etc, etc. it will all tie in then.
as I have said santa delivered a new pc ...still getting a grip of vista.
and anyway the setup is the same day in day out, week in week out. I learnt my lesson in my journal, post the same charts all the time, everyone goes to sleep
thanks c_v for the advise, key illustrations yes, they're on the way
Lightning McQueen
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Lightning McQueen
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Sorry trendie, yes good and timely reminder, I will do a post on that over this weekend before next weeks live(ish) launch, as it is most important, cheers
on second thoughts, I have to keep some edge for myself haven't I ? I'm torn on that one, should I share or keep that is the question
good karma will come from sharing, yet I will lose edge
on second thoughts, I have to keep some edge for myself haven't I ? I'm torn on that one, should I share or keep that is the question
good karma will come from sharing, yet I will lose edge
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firewalker99
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Great thing to go live, but (hope you don't mind me asking), how much time have you spent testing or papertrading the three keys? I know you've been on the path of MA's since around 2006 I think it was, so you obviously put in some time and effort to study things. How much confidence do you have and have you set a threshold that identifies when you have to stop trading?
Another Q: have you applied the rules to a randomly picked time frame and instrument or are you sticking to the FTSE on hourly bars? (Not that there's anything from with that!)
Good luck!
