Quote:
Originally Posted by jbfx
Sounds interesting about the TD Moving Average. I hope someone will code this up. What timeframe is good?
If I understand what you are trying to say, can we modify a simple moving average indicator, and only highlight the background of the 4 bars following the lower lows than the last 12 bars or higher highs than the last 12 bars. So it's kinda like a ghetto way of doing it, not pretty for sure.
But it seems like the coders like to do EA's and chase after holy grails.
So what is this other indicator to use in conjunction if you don't mind? I like to manually check your claims.
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Hi JBFX,
Thanks for the reply. The indicator can be used in any timeframe, but I dont personally trade anything other than 15 or 60 min for fx, maybe 30 min if I'm feeling adventurous
. I use the moving average, mainly as an exit signal, though I do sometimes take entry based on valid breakouts (using simple 1-2-3 patterns, TD Sequential, TD Combo, TD Camoflage or TD lines with qualified breakouts). The only trouble with trading with this
sometimes in the FX market is that to qualify an exit, for a trade that is already on, the bar must close above or below the moving average. Sometimes, but not all times, and due to the nature of the market, price will close for one bar below the average and scoop right back up. This is just the nature of this market, which is ultra-liquid (that's just trading, folks). I have found (but not 100%) that the occurrance is less frequent if you're trading commodity or index futures off of tick charts (where the bars are much more "rigid", if you know what I mean). In all cases, I just need to verify the breakout using any of the above mentioned or basic trend analysis on an even smaller timeframe. Either way, its still a solid function. Its saved my butt more than a few times.
The moving average has allowed me to keep positions open for extended periods of time that I would have normally closed earlier using other systems. Much better than a fixed trailing stop (I have found). I normally target 1.682 extention price targets using my main strategy, but will keep things open if (1) the moving average proves continuation and (2) leaving the position open is within my bounds of risk/reward.
To manually verify its results, you can just set up an SMA of the highs and lows and do the count manually. Thats what I've been doing so far. You'll see what I mean in regards to its effectiveness over trailing SL's (though you should always have some SL or reverse order in place somewhere). As with ANY indicator, BEWARE the spike entry :0. Thats why I favor breakout strategies. A good little trick I use is to take the full range over the 4 previous bars (highest high minus lowest low). If the current bar is greater than that entire range, and you want to take a trade in the direction of the spike, watch out. You're usually primed for a retracement. Not always the case, but this has saved me lots of $.
I dunno. Just some ideas to swirl around. But I love questions. Always looking for smart ideas.
Thanks!
S.