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Curve Fitted Displaced Moving Averages
Hello,
I have been experimenting with displaced moving averages lately and I found something rather interesting. Plot a 3 SMA with a displacement of 8 on an hourly chart. It catches all the trends pretty quickly. The problem, of course, is the chop.
If you consider that markets may in fact have waves and they are of different lengths and speeds, you could try and anticipate these changes by adjusting the displacement for the previous day, week, month and trading off of that difference.
I am requesting someone to make an MA which will adjust based on the previous days closing data.
For example, in the chat you can see the EUR/USD. Yesterday the best setting to use was the displacement of 5. With this setting the market was captured most comfortably in its long or short bias. And following that same setting for today, the market has been following the same line. If it does not accurately reflect the cycle and speed of the market on the close, we can adjust it again for tomorrow.
Does this make any sense? I know most people will say anything which is perfect in the past will certainly be wrong in the future. But consider that almost all successful short term trading relies on this "false" assumption. If the market is going down, why should we expect it to stop going down? Only because we have observed in the past that after a certain speed of dropping markets tend to reverse.
The only thing I can compare which I have seen on this forum is the zig zag series of indicators but these are really only good for seeking out levels of support and resistance, at least the way that I look at them.
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