I'm no expert on CFDs, but this can't really be true. If a market maker in CFDs starts getting hit, he will be required to obtain that risk in the market, at least on a netted risk basis. In other words, they have to obtain the risk that they offer to their market via CFD. Nobody can just grant risk arbitrarily without sourcing and managing that risk themselves. Another way to say it is that market makers maintain a hedged position to facilitate their operations. The risk has to be managed. With those new "prop" scams, the traders are actually paying to participate in a simulated environment, which is truly fake trading. In that case, your statements would apply as written.
No (and apologies for the ambiguity; I posted hurriedly). I meant that only the retail CFD optimists “traders" are entering positions primarily on the basis of moving averages crossing over each other. Many institutional traders also have MAs of various kinds displayed on some of their various screens, of course, but they’re never entering positions primarily on that basis.
".... extremely small lag. ...." ".... with very little lag ...." ".... a small amount of lag ...." I'll stick with price, it doesn't lag even extremely small or very little.
That an indicator lags price, does not make it useless. Many algorithms actually use lagged price. Furthermore, a fast moving indicator can serve as a proxy for lagged price, and in some cases is actually superior to lagged price. This is because it also acts as a filter for price moves, which can reduce bias in its signal. Ehlers and Dorsey are smart guys. Ehlers does signal processing, and Dorsey is the inventor of RSI, and it's (relatively unknown) 'spiritual successor', the relative volatility index. I can recommend their work to serious algo architects. One of my best algorithms for analyzing VWAP algo's, uses this idea. Basically, you difference a time series against an EMA, and then integrate the resulting data series. This is related to trend removal/detrending, and can be used to reveal extremely subtle bias in a timeseries.
A two day average adds 1/2 bar lag, but does put a zero in the transfer response at the Nyquist frequency.
Hello. I can say that likes me very much this Topic because, possibly, love the moving averages. For the moving averages speaks for first time to me a Greek Retired Navy Officer when make my first moves in the Greek Stock Exchange back in the Year 1996. Impressed me for the first time that I think them. But the basic problem to them for me is their calculation. I remember that making with hand and pencil calculations into paper to a moving average for the Greek Stock Exchange Index. But a Greek clerk in the Brokerage Firm that makes my trades speaks to me for Metastock. I didn’t know anything for it and for the new era that the personal computers brings about to all People. In the Year 1998, I bought a personal computer and I bought and the Metastock Version 6.5. From the company that bought the Metastock an employee there tried to appear to me that Software. When try to use it the Software from the first time I tried a lot the exponential moving averages to it. The Software appears the data of them very rapidly to it and is a God Gift to me because I stop the calculation of the moving average that did with my hand, pencil and paper to the Greek Stock Exchange Index. The major problem with the moving averages with my small opinion, is their lag from the current price of the Stock or a Commodity. With the pass of the Years two things happen to me and my thought from the side of the moving averages. My best inspiration comes when try to calculate the difference between two moving averages. Then in that result I put another short to it, moving average. Because in the many years that pass of the use of Metastock I learned by me as best that can their Formula Language. That thing help me to create my own moving averages Indicators into Metastock. The second thing that borned into my mind was the following: When a moving average caught the other, for example a 10th moving average caught the 120th moving average and be above to it, to use for the calculation of the fast 10th moving average the highest prices in the bars until the 10th moving average caught again the 120th moving average and pass lower to it. When pass lower to it, i make calculation of the fast 10th moving average of the lowest prices in the bars until the 10th moving average caught again the 120th moving average and pass above it. But for to create that Indicator into Metastock, I use the help of a Great Metastock Formula Language Creator, named Scott Bunny with payment to Him. Now, the Oscillators I have try them almost all in the Metastock. From all of them likes me the CMO Chande Momentum Oscillator with combination with moving averages. I hope to find my Thoughts and Ideas useful! Kind Regards, George Kanellopoulos.