i think,really i do think, not all of the time, sometimes i like just to get drunk!, that if you trade this actively and you get some experience trading this it can make you money, easy money but not lot of money? What is hard money? Trading price action or scalping! I am not sure you can make sense of this .....and no I am not Brooks, posting in another name though, it may sound brookish
traderGOD, I think you might be the only guy on this forum that gets drunker than me on the weekends lol!
i am not as sure as you are......if you test it in all conditions, you will see it does not make money long term. But if you test or use it only when the market is trending, when all the ma line up,then you will get 100% winners.But you may get only 1-2 trades a week The problem is, while you are waiting for the ma to line up, you will see the market spiking all the time and you start to ...."Hmmmmmmm if i could catch even one of those spikes i would make ten times as much as when i am trading these ma..." and you start to read Brooks. that is the end, my friend,.... the end -Jim Morrison,Doors
Haha maybe we could have a competition when markets are closed.....but providing the drinks are on you....drinks taste better when they are free!
In a nut shell, long term moving average cross systems can be effective at eliminating huge draw downs, but they usually do not beat the market on a return basis. There are lots of studies dating back to 1950 and even earlier, but my advice is to only use the longer term MA strategies such as 10 or 12 monthly SMA or 200-day, etc. And expect that you will slightly underperform an index fund, albeit without the 30-60% DD's.
By eliminating the large drawdowns, a trader would outperform because they would puke the buy and hold at the bottom. Thus their net return with a MA system would be greatly superior to most people's buy and hold. It matters not if the system beats the index, it beats their performance using said index. That is the systems' advantage.