MoneyTec Traders Community Forum - View Single Post

astro · 24-10-2006, 06:17

Do a little research on the Technical Trading forum.
You will find dozens of MA cross systems threads.
21emas, 34smas, 100wmas etc etc.
They all work sometimes. The problem is that when they fail, they will eat up all your profits.
Think about it for a moment. If trading was that easy why is everybody still looking for a system? Why wasn't it found yet? How come nobody discovered your 40 wma system yet?
Entering multiple lots can make things only worse! You are talking about risk management? Tripling the amount of lots is tripling the risk!!! If trading one lot is risking 2% of the account for example, then entering 3 lots is risking 6%!!!

As to pattern recognition, I think there are some charting software out there that can identify 1-2-3 patterns which are one of my favourite patterns, especially when they appear around key levels (round numbers, fib level, etc).
It's very hard to program such a thing, but your brain can do it quite easily.

By the way, here's a thought for you:
We all know that MA is lagging, which means that by the time you see the cross, price has already moved quite a distance. Why not use chart patterns in order to identify the trend at the beginning? Many trends start after a reversal (1-2-3 for example). Enter when you see one! So now, when price crosses your MA then you know that you're on the right track and you are already in!
Check my attached chart from yesterday: during asian session, price has formed a small 1-2-3 top (which was, to be honest, not a typical one) and reversed. There was an entry opportunity right after the UK market opened (on the 15 min chart), so I shorted @ 8790. Look where you would go short using the MA cross: 8730! that's 60 pips away!!!

You're right. It's not as easy as "if price > ma then...". Recognising the patterns is very discretionary (in this example many would not classify it as a 1-2-3 top) but it gives you the advantage of getting in earlier and catching a larger portion of the move with stops at a logically better place!

Hope this helps
Astro

24-10-2006, 06:17	#13
astro level 2 Join Date: Aug 2005 Posts: 182 Downloads: 0 Uploads: 0 Rep Power: 4	Re: Automated Trading Theory Discussion Do a little research on the Technical Trading forum. You will find dozens of MA cross systems threads. 21emas, 34smas, 100wmas etc etc. They all work sometimes. The problem is that when they fail, they will eat up all your profits. Think about it for a moment. If trading was that easy why is everybody still looking for a system? Why wasn't it found yet? How come nobody discovered your 40 wma system yet? Entering multiple lots can make things only worse! You are talking about risk management? Tripling the amount of lots is tripling the risk!!! If trading one lot is risking 2% of the account for example, then entering 3 lots is risking 6%!!! As to pattern recognition, I think there are some charting software out there that can identify 1-2-3 patterns which are one of my favourite patterns, especially when they appear around key levels (round numbers, fib level, etc). It's very hard to program such a thing, but your brain can do it quite easily. By the way, here's a thought for you: We all know that MA is lagging, which means that by the time you see the cross, price has already moved quite a distance. Why not use chart patterns in order to identify the trend at the beginning? Many trends start after a reversal (1-2-3 for example). Enter when you see one! So now, when price crosses your MA then you know that you're on the right track and you are already in! Check my attached chart from yesterday: during asian session, price has formed a small 1-2-3 top (which was, to be honest, not a typical one) and reversed. There was an entry opportunity right after the UK market opened (on the 15 min chart), so I shorted @ 8790. Look where you would go short using the MA cross: 8730! that's 60 pips away!!! You're right. It's not as easy as "if price > ma then...". Recognising the patterns is very discretionary (in this example many would not classify it as a 1-2-3 top) but it gives you the advantage of getting in earlier and catching a larger portion of the move with stops at a logically better place! Hope this helps Astro Attached Thumbnails