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Originally Posted by alp
This is the way I view the problem of digital filters. All IMHO of course.
My conclusion is that they are useless. At least these indicators do not have any advantage against good old moving averages. The authors used to claim the opposite however. My real time trading with this set is quite disappointing.
The indicators were designed for EURUSD 1D with reference to 1W, so 15M GBPUSD is out of question from the start. The system requires at least 100K depo for common traders. Positions are kept for weeks.
The set of rules is quite complex and requires interpretation of 7 elusive indicators each of which is characterized by direction and a slope or tilt.
If you spit on it and start using them like common MAs you'll soon be disappointed as well. They may be zero lagging as the authors claim, they are really smoothed and appealing but they are adaptive. That means they are readjusting themselves and cook history. And this problem has no solution. It's applicable to the whole set of so called adaptive indicators including jurikies. To be just, the authors never use the term "crossover" in the set of rules however it doesn't remedy the situation.
Good trading.
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You are right.
There are two theories:
- market is changing all the time but we do not need to create anything new. We need just use the old indicators which are the same in any market situation to draw the lines and arrows on historical data for its intrepretation (with some probability);
- Market is changing and we must be changed together with the market.
I think the truth is somewhere in the middle.
Alp, just imagine that you are military submarine from US or China. And I am an other submarine, very small one and not military at all. From Russia. How can I recognize your submarine?
Easy.
But if we have the other vessels but I want to recognaze your submarine especially? Difficult: fishes are talking between each other, and other vessels are producing the big noise, and your submarine is changing the frequency all the time ...
Digital filter will help me.
Of course the trading systems based on the filters only are not the good systems (digital filters or MACD or whatever).
But we want to understand something about the filters to use it in our trading systems. To find the way to use it.
Why not?