A Moving Average Trading System
- Thread starter TradersEdge
- Start date
All the boarders / traders,
As far as the any moving avg trading system is concerned just check the trend line breakout for confirmation. This is the best strategy to be used to avoide any whipsaw....
For example if you consider 5-10-20 system; before higher moving avg turns up / down (in this case it is 20 DMA) the price action brakes up/down alongwith smaller moving avgs (in this case 5DMA and 10 DMA)
suppose if mkt is trending down previously then draw a line connecting two previous tops. if the Price brakes up above this trending line along with smaller 5-10DMA then next you can expect the Higher 20 DMA will start moving up.
There r two instances at which trade can be initiated
1. At brake out above trend line with 5DMA crossing above 10 and 10 DMA also moving up. 5-10DMA above 20DMA (Risk is higher here) SL will b @ immediate Low before breakout happens.NOW 20DMA slopping up will confirm the action where u can add more.
2. Take position only when 20DMA starts slopping up and 5-10 DMA are above 20DMA
First one will be more useful in day trading and second will be in positional trading.
As far as the any moving avg trading system is concerned just check the trend line breakout for confirmation. This is the best strategy to be used to avoide any whipsaw....
For example if you consider 5-10-20 system; before higher moving avg turns up / down (in this case it is 20 DMA) the price action brakes up/down alongwith smaller moving avgs (in this case 5DMA and 10 DMA)
suppose if mkt is trending down previously then draw a line connecting two previous tops. if the Price brakes up above this trending line along with smaller 5-10DMA then next you can expect the Higher 20 DMA will start moving up.
There r two instances at which trade can be initiated
1. At brake out above trend line with 5DMA crossing above 10 and 10 DMA also moving up. 5-10DMA above 20DMA (Risk is higher here) SL will b @ immediate Low before breakout happens.NOW 20DMA slopping up will confirm the action where u can add more.
2. Take position only when 20DMA starts slopping up and 5-10 DMA are above 20DMA
First one will be more useful in day trading and second will be in positional trading.
Hello everyone, first time posting here. Did anyone look into Karthik's modification of the 3x13x39 system by using the 13 MA on highs and lows to reduce whipsaws? I didn't see anyone comment on it.
Karthik, are you still here?
Just by looking at some charts on forex, it looks like making the 3 MA crossing the 13 MA high or low gives a cleaner signal.
THanks for any comments.
Karthik, are you still here?
Just by looking at some charts on forex, it looks like making the 3 MA crossing the 13 MA high or low gives a cleaner signal.
THanks for any comments.
Hello traderji, I would like to thank you for a very simple system and your kindness in sharing it with us all.
I would like to give you my interpretation of the system and give you some observations which may or may not help others in the use of this system.
First, I find that in ranging markets when the 39ma is flat it is much better to just leave alone.
Once a trend has developed you will find that the 3ma will bounce off of the 39ma giving you a good place to enter and subsequently to add on to your position.
If the 3ma crosses over the 39ma and a candle closes below the 39ma then this more often than not signals a trend reversal and gives a good trade in the opposite direction.
I use a 20 pip hard stop loss and a 50 pip trailing stop which keeps your losses small and allows your winning trades to run. On metatrader this works fine although the trailing stop doesn't start to trail until you are at least 50 pips in profit so your risk will not be reduced if the trade reverses early.
Thank you again for your help and I hope my post helps others.
I would like to give you my interpretation of the system and give you some observations which may or may not help others in the use of this system.
First, I find that in ranging markets when the 39ma is flat it is much better to just leave alone.
Once a trend has developed you will find that the 3ma will bounce off of the 39ma giving you a good place to enter and subsequently to add on to your position.
If the 3ma crosses over the 39ma and a candle closes below the 39ma then this more often than not signals a trend reversal and gives a good trade in the opposite direction.
I use a 20 pip hard stop loss and a 50 pip trailing stop which keeps your losses small and allows your winning trades to run. On metatrader this works fine although the trailing stop doesn't start to trail until you are at least 50 pips in profit so your risk will not be reduced if the trade reverses early.
Thank you again for your help and I hope my post helps others.
I really appreciate ur explaination towards trading based on MA crossover but i really doubt if this work fine to make u earn consistently as 3 tick MA for whatever time trame u use changes quite offend.
What is would like to add is MA are good for trending market which followed on broader time frame say 60 min will help u esle whipsaws & slippage will eat up your profits.
U can checkout a oscillator such as Stokastic along with MA to give u a better trading call and avoid profit eating whipsaws atleast reduce ur trades whn there is no proper trend but to exit follow MA discipline.
What is would like to add is MA are good for trending market which followed on broader time frame say 60 min will help u esle whipsaws & slippage will eat up your profits.
U can checkout a oscillator such as Stokastic along with MA to give u a better trading call and avoid profit eating whipsaws atleast reduce ur trades whn there is no proper trend but to exit follow MA discipline.
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