When I described my approach in a previous post without mentioning the MA's you seemed think it was sound in theory. I can and have traded it with and without the MA's, without the MA's is pretty much the method Marc Rivalland describes in his book, but I thought they can't hurt so I leave them there. I see what you are saying. Entering a trade at a moving average I am actually buying/selling at the average price, rather than the price where it is over-extended and due to revert to mean/average? Interesting. Getting out the previous high seems logical, often the price reverses as it gets near the previous high and forms a double top so I get out just before that happens. The targets aren't just figures I pull out the air, like "I think I would like to make 3.5 x my risk on this trade so I can buy a bunch of lap dances this weekend". If I tried to hang on to the runners I would a) have to accept a lower win rate and b) figure out a way to know when the move was losing steam, which I have not been able to do as of yet. If I know from my trading records and research roughly how likely my target is going to be hit and I know what my risk is and what my potential reward is then surely it is something useful, no? Let's say I know on average I win 50% of my trades (if only) then it makes no sense for me to taking trades which can only return 65% of what I am risking. My winners would not cover my losers, BE would be 1 x R. I am reading about it, funnily enough the first page on mean reversion I came across contained a lot of talk of MA's = ). Obviously I am not saying I am right and you or wrong, I mean you could be wrong, but most likely at least I am wrong, I have the trading records to prove it. I am just trying to explain my thought process, to me my point of view seems pretty self-evident in theory.
But this begs the questions, what frequency MA? I could cover my chart in so many different MA's that I can't see the background anymore, if I was avoiding MA's I wouldn't be able to enter a trade anywhere. Probably goes to show how meaningless they are. Then again not all MA's are created equal, probably.
The faster the MA, the closer one gets to real price action. Eventually, one will have to decided whether to just make use of the price movement itself, instead of a lagging indicator. Gringo
If you're genuinely interested in this, I'll be happy to post a few charts. I assume you are since you're still discussing this, but they do take time to put together.
I am genuinely interested, please post away. I have been looking at your "if you can draw a straight line" thread with great interest
No offence but if after all this you try and sell me a trading course or a bot I will feel very betrayed = )
If there's a course, it's in the three threads I initiated. If therapy is required, that's $300/hr (just kidding, Magna).