- Joined
- 22 August 2008
- Posts
- 914
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- 20
Hi there.
Had a chance to read through " Stuff ".
I don't wish to add only that we are looking for a measurable set of conditions
So this can be tested.
It is not known whether the conditions chosen are indeed " correct " until placed into a formula which can be tested.
T/H has suggested a low volume rise could signal a change of sentiment.
Tech would suggest that Shorts would be un wound in selling volume not buying volume.
So I would expect any turn to com after some exhaustion of selling.
All of these hypothesis have to be tested against like stocks past data.
Experience has also shown me that prolonged down moves rarely " v " bottom and are likely to rally then fail once again.
Consolidation --- sideways tends to pre cursor sustained up moves.
Mean reversion in my experience works best in corrective up moves--- unless your adding or entering shorts.
In the end it will work or not in the formula tested.
From what you've said then, you're simply looking at an increasing price movement, (which would appear at the change in trend point from a descending trend pattern. What's the advantage of using your metric as opposed to a Std Dev break? I assume you find it easier to scan for?
Hmm... I don't like to encourage the use of a bad indicator. Using a 5/20 SMA....not as good as using a cross period like a 12/26 SMA, precisely because a 12/26 doesn't correspond to a week/month. But hey, this is your system, use what works for you!
Right, so you're creating a lagging signal that shows the change from the downward trend. Presumably you can then finetune the N value in your testing phase. I like it.
"...then it's probably safer"...to me at least, is an emotional "feel", not a statistical statement.
Like I highlighted in red, 5/20 is only an example! The suggestion was not 5/20 specifically, but to use 'logical' parameters (e.g. ones that correspond to a larger unit of time) as a starting point to convert a trading statement into code. You've given 12/26, if this is a robust signal then you'd expect similar performance from a "two week avg/five week avg" crossover, right?
Personally, I don't use a fine-tuned N, as my testing shows this is actually not the most robust signal. I use an adaptive N, or ranked aggregate of Ns, depending on the market and timeframe I'm measuring trend changes in. But yes, my trend signals lag.
Hmm... I don't like to encourage the use of a bad indicator. Using a 5/20 SMA....not as good as using a cross period like a 12/26 SMA, precisely because a 12/26 doesn't correspond to a week/month. ...
Cheers
Sir O
I can see what you are saying here
(about a crossing over of a short trend indicator and a long term indicator)
but I cannot see what it is you are trying to avoid by the finnessing!
A few questions for you on the above.
Rally then fail. Is the rally worth it? IE does the rally give us a beneficial win/loss with a high expectancy?
I've shown in your thread one of the things I do in relation to Hard pivots and Soft pivots to manage ongoing trade positions. At the moment in this system we've spoken about what we are looking for, what we might measure it against, what we might use to trigger...but we're yet to discuss under what conditions we will exit.
So we have the situation where a change in trend has occurred (albeit from a descending one to a neutral one) - what's our downside risk? Failure to result in a V pattern emerging means what to our bottom line?
Want to give the Chart the Tech/A onceover?
I can see what you are saying here
(about a crossing over of a short trend indicator and a long term indicator)
but I cannot see what it is you are trying to avoid by the finnessing!
I just never get the idea of two MA crosses. What the F are you trying to do?
Does it come from some stupid idea that after a certain move you have "confirmation"? Becuase everything i know about trading is waiting = larger stops, smaller winners; therfore no profit.
If you want a MA as a signal why not just use price crossing one MA?
Has anyone EVER made a system work with MA crosses?
... there is slightly greater volatility in the Australian Market at the beginning of the week as we react to overseas markets. End of month is simliar ...
Cheers
Sir O
... this is a newbie thread ...
I just never get the idea of two MA crosses. What the F are you trying to do?
Does it come from some stupid idea that after a certain move you have "confirmation"? Becuase everything i know about trading is waiting = larger stops, smaller winners; therfore no profit.
If you want a MA as a signal why not just use price crossing one MA?
Has anyone EVER made a system work with MA crosses?
... exploiting hysteresis in the time-series ...
... price is always present and m/a's are always lagging, that must imply that you, the trader, is the forward looking indicator...... ...
Not to be confused with Hysteria. (lol)
Hysteresis is the dependence of a system not only on its
current environment but also on its past environment.
Getting back to it:
What I think we are doing here is ironing out the wrinkles
in the Share Price Action so that the trend becomes
sufficiently clear to avoid entering prematurely.
Yes. Ever bothered to look? Plenty of papers in journals and analysis in the blogosphere by respectable quants on the topic.
The key is
In a bull market ANYTHING " works "
In more challenging market analysis needs
To be at the coal face.
But it still doesn't make sense why if you thought a MA has some effect to smooth out volatility OR as a trend channel why not just use one? To me its like having a chart with 3 indicators in the false sense that more is better, in effect what you will end up doing is having to wait LONGER for all indicators to give a signal in the false sense that that is confirmation. But there is no such thing as confirmation.
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