A Moving Average Trading System

[pgd]

hi guys,
while we are on trading averages, just read what chuck has to say:
http://traderclub.com/discus/messages/107/1027.html?ThursdayDecember720000127pm
Chuck lebeau , by the way, is very highly thought of by Dr Van Thrap.
cheers

I do see Chuck's point, in that unless both MA's are pointing in the same direction, the trend may not be clear. The purpose is achieved by waiting for one more bar to form after the crossover. If that bar progresses in the same direction as the previous bar, you'd have both MA's pointing in the same direction. On the other hand, waiting for widening between the 2 averages, before entering a trade, could be risky. Widening simply means that the trend is stronger than at the previous bar and not that it will be strengthening at the next bar!

ALSO...let's not forget that MA's are trend following indicators and give signals late anyway. Waiting for widening to happen would quite often cause an entry at exhaustion of the trend and that's an area of pain we all know...

 

[Roshanna]

HI PGD,
want can be used is "Guppy averages" i.e a band of slow moving averages and aseparate band of fast moving averages. then if fast ones(Traders) start moving away from slow moving ones(Investors) maybe it will be a move in making
what do u say?
cheers

 

[pgd]

Roshanna,

well, that's the conventional thing with guppy averages. but frankly, there are so many complex and powerful indicators these days and computerised trading systems that people using conventional indicators are simply made Mickeys of.

take care,
cheers.

 

[Puddi]

Hi Traderji

The 3, 13, 39 trading system seems like a good one - BUT when exactly would you enter the trade on a Forex chart and what time frame? I like to trade the 15min charts and have backtested this system - there were quite a few false crosses where I could have lost money.

The systems I have used in the past were a 3rd candle entry over crossover, what are your thoughts?

Thanks Puddi

 

[Puddi]

hi.

i posted a message on october 5th & still havnt recieved a reply from the recipient.
the message was about entry signals on a moving average crossover.i trade 15 min time frame & still cannot find the right solution to suit my style of trading.

any thoughts?

 

[Traderji]

Here are the trading rules:

Simple Trading Rules

1. When the 39 MA is moving up buy when the 3 MA crosses up over the 13 MA. and/or when the 3 MA crosses above the 39 MA.. When the 13 MA crosses above the 39 MA consider adding to your long position. Exit and stand aside when the 3 crosses back below the 13 MA..

2. When the 39 MA is moving down sell short when the 3 MA crosses below the 13 MA. and/or when the 3 MA crosses below the 39 MA.. When the 13 MA crosses below the 39 MA consider adding to your short position. Exit and stand aside when the 3 MA crosses back up over the 13 MA.

3. Only initiate trades in the opposite direction of the intermediate trend when the 3 MA crosses above or below the 39 MA, preferably after the 39 MA has already changed direction.

4. This 3:13 MA crossover will keep you trading in the trend with only a small lag and on the sidelines during corrections. The lag only becomes more substantial at reversals of the intermediate trend (a 3:39 crossover), a small price to pay at these uncertain times of trend transition.

You can set your technical analysis sofware to show bar charts with these 3X13x39 simple MAs. This trading system will help you select the best traders while avoiding the less profitable trades in choppy markets.

Hi Traderji

The 3, 13, 39 trading system seems like a good one - BUT when exactly would you enter the trade on a Forex chart and what time frame? I like to trade the 15min charts and have backtested this system - there were quite a few false crosses where I could have lost money.

The systems I have used in the past were a 3rd candle entry over crossover, what are your thoughts?

Thanks Puddi

 

[narayanan]

Rising MA may act as support in rising market &downing MA may act as resistent'.IF price go down, but its MA moving up. it is better to go long at the meeting point of MA & price. and reverse is also true.

 

[Brand]

What indicators could be used with such a system.ex. macd,stoch,aroon?

 

[jatayoo]

dear tradersedge
The system is reasonably good,using moving averages:but their are simple,weighted,and exponential moving averages.
If you have traded with this system then could pl tell us your views as to which of the averages i.e simple,weighted,or exponential is most desirable?
I may also add that this system can be used alongwith candlestick charting patterns for effectiveness.

 

[jatayoo]

The interesting thing i can suggest here is to use the candlestick chart pattern reading skills alongwith 3x13x39 or the 5x15x40 system