Moving Average

[Chorlton]

Trend is a trend right...

The stronger the trend the better right??

Why would you be worried about it falling quicker when you are riding the trend for as long as you can??

Having a predefined exit you will not be worried about whether it will fall or not

Depends....

If you were to follow the trend too closely you would capture the initial "steeper gradient" smaller trend but as it falls back you would get stopped out even though the trend may then continue upwards.

However, if the trend's gradient was less aggressive (but still constant and steadily rising) there would be a higher chance of capturing the larger trend resulting in better profits.

Of course this problem could be overcome by widening the trailing stop but that it another discussion.

 

[fapturbo]

Depends....

If you were to follow the trend too closely you would capture the initial "steeper gradient" smaller trend but as it falls back you would get stopped out even though the trend may then continue upwards.

However, if the trend's gradient was less aggressive (but still constant and steadily rising) there would be a higher chance of capturing the larger trend resulting in better profits.

Of course this problem could be overcome by widening the trailing stop but that it another discussion.

Want to identify a tradeable trend first and determine how to select one stock over another.

Exit yes that's something different.

 

[fapturbo]

I use the classic definition of a trend, i.e. higher peaks and higher troughs for an uptrend, lower peaks and lower troughs for a downtrend.
I like moving averages to confirm the trend.
I agree with anyone who says moving averages are unnecessary. But unnecessary doesn't mean they're not useful.
As for which moving averages to use, I've borrowed some ideas from Dave Landry and Alex Elder.

Elder says that whatever timeframe you trade from, you should first identify the trend in a timeframe that's four to five times higher, then you go back to the shorter timeframe and trade in the direction of the trend of the longer timeframe.
A trader from daily charts would first identify the weekly trend, which is five times longer than a day. Then he'd trade the daily chart in the direction of the weekly trend.
A trader working from 15 minute charts would first identify the trend on an hourly chart, which is four times as long as 15 minutes. Then he'd trade the 15 minute chart in the direction of the hourly trend.

Now you are talking a language that can be quantified.

 

[seasprite]

Now you are talking a language that can be quantified.

you are a pr0n star , and you know it.

 

[bunyip]

i use moving averages and a MACD MRC on 15min time frames.

not the tools u use but how u use em.

MACD MRC? What's the MRC part mean?

Care to tell us how you use it?

 

[>Apocalypto<]

Yep, and how much emphasis you give them.

I bet you use a lot of other reasons for your trades which give more weight.....

I will run you though an example.

This afternoons trade

look at the box that is the lead up, signal and the trade signal.

The lead up...
The MACD showed a drawn out higher low at the base of a nice trend down. tails with double bottom on the price just outside euro open showed a sign of trend change.

Signal
price climbed up over the blue 13ema. the emas crossed with a nice strong angle. the price pulled back with resistance off the 13ema. The MACD made a lower bar. Look at the volume on the bar with the tail.

Trade signal.
next candle was a reversal with a close above last bar. The price has a habit of coming back into the mas after the cross. The MACD made a higher bar showing a trend continuation signal. the price had resistance on the 89 ema but the angle is flat showing no trend from down, it's discounted.

long at the close +12 pips.

I use all of it rolled together. Price is as important as the MACD and the EMAs in this approach.

 

[MRC & Co]

MACD MRC? What's the MRC part mean?

Care to tell us how you use it?

LOL, because his post was directed at me.

Apoca, yep, you use the MACD and MAs in correlation with numerous other reasons, generally what is required.

Thx for the post.

 

[>Apocalypto<]

LOL, because his post was directed at me.

Apoca, yep, you use the MACD and MAs in correlation with numerous other reasons, generally what is required.

Thx for the post.

you're welcome.

I do agree that 100% indicator systems can work for a while but if u ignore price it's self then you will be doomed to fail.

I think EAs are working on proving that wrong.

cheers

 

[bunyip]

What has the Stop Placement got to do with how much you decide to risk?

Nothing - money management determines the amount of risk.
I use the 2% rule to ensure that 2% loss of my trading account is the worst case scenario if my stop is hit.

 

[fapturbo]

I will run you though an example.

This afternoons trade

look at the box that is the lead up, signal and the trade signal.

The lead up...
The MACD showed a drawn out higher low at the base of a nice trend down. tails with double bottom on the price just outside euro open showed a sign of trend change.

Signal
price climbed up over the blue 13ema. the emas crossed with a nice strong angle. the price pulled back with resistance off the 13ema. The MACD made a lower bar. Look at the volume on the bar with the tail.

Trade signal.
next candle was a reversal with a close above last bar. The price has a habit of coming back into the mas after the cross. The MACD made a higher bar showing a trend continuation signal. the price had resistance on the 89 ema but the angle is flat showing no trend from down, it's discounted.

long at the close +12 pips.

I use all of it rolled together. Price is as important as the MACD and the EMAs in this approach.

How do you define the exit??

 

[seasprite]

How do you define the exit??

you ask a lot of questions , why not define your exit.

 

[fapturbo]

you ask a lot of questions , why not define your exit.

I use round numbers Bar Highs and Lows as exits.

I dont use indicators. Price is the number one indicator.... All indicators follow price... Nothing leads price...

Sometimes divergence of indicators can give a warning of a trend reversal when price is making a higher high. However I prefer price to tell me it is reversing...

 

[seasprite]

Nothing leads price...

you are confirmed as pathetic

 

[fapturbo]

you are confirmed as pathetic

If you have ever traded forex then you would know what i mean by round numbers, and bar highs and lows mate.



Some believe indicators are the way to go... I dont

 

[beamstas]

you are confirmed as pathetic

Huh? That was a bit harsh?
Anyway can you expand?
I'd like to know what leads price (other than a crystal ball)

 

[>Apocalypto<]

How do you define the exit??

candle range for exit and profit target.

 

[white_goodman]

I use round numbers Bar Highs and Lows as exits.

I dont use indicators. Price is the number one indicator.... All indicators follow price... Nothing leads price...

Sometimes divergence of indicators can give a warning of a trend reversal when price is making a higher high. However I prefer price to tell me it is reversing...

I agree 99%, the other 1% is believe is that historical indcators has its place... price action/candlestick patterns off moving averages... support and resistance can be likened to a historical indicator....why not have the best of both worlds, the deciding factor being price action tho

 

[fapturbo]

I agree 99%, the other 1% is believe is that historical indcators has its place... price action/candlestick patterns off moving averages... support and resistance can be likened to a historical indicator....why not have the best of both worlds, the deciding factor being price action tho

It's a bit difficult to code price action.

 

[Mr J]

I don't know about it being an "art"

I think trading needs to be mechanical with a proven method. It's the only way otherwise you are just gambling.

Anything can be art, as art is the application of skill. We are also gambling, as technically gambling means to place a stake on an uncertain outcome. A method is only proven after a reasonable period of success, but all that proves is that it was successful over that sample, and not that it is proven going forward.

But wouldn't you say that you can still profit against the trend?

I would, as one man's pullback is another's trend .

no , pick the trend before it begins.

We can't though. You can get in before it begins and risk being run over, or you can sacrifice a slice of potential profit and gain a much better winrate by waiting for different levels of "confirmation".

If you were to follow the trend too closely you would capture the initial "steeper gradient" smaller trend but as it falls back you would get stopped out even though the trend may then continue upwards.

How to manage a trade is always a compromise.

I use all of it rolled together. Price is as important as the MACD and the EMAs in this approach.

It's all price :.

I use the 2% rule to ensure that 2% loss of my trading account is the worst case scenario if my stop is hit.

Unless there's a blackout in Sydney and IB goes down, while the SPI stays up!

I'd like to know what leads price (other than a crystal ball)

Traders, but unfortunately I can't read them.

 

[beerwm]

Nothing leads price...

why does everyone fight this so hard?

price can be predicted - not 100% right, 100% of the time.
but to a higher degree than random chance.

I cannot see how anyone is making money if they cant predict future prices.

if you couldnt predict price... why would u ever enter or exit a position?