birddog, if anyone here is a super_ego expert, it's me. i've gone over every one of super_ego's posts MULTIPLE times. i think he had some good things to say, but i came to the conclusion that, as a whole, what he said isn't enough to trade on. he never got into stops, etc. i like his use of the 5sma, but there are too many times when it doesn't work. and we don't know how he deals with this (stops). i will clearly explain what i mean.. yes, there are times when there's a fantastic uptrend where you could buy all the pullbacks near or below the upsloping 5sma. you can find many of these instances on any chart. the trouble is, this is hindsight. you can also look at charts and see many examples where the 5sma is wiggling all over the place and price is not adhering to the 5sma. here is a major problem i see over and over again with this method. sometimes there will be a strong trend that will not even pull back to the 5sma for many bars. when it DOES, super_ego would say to enter there, but i find many times when a strong trend finally pulls far enough back to the 5sma, IT FLIES RIGHT THROUGH IT. if what i said is debated or not understood, i can post charts.
Gordon, I should probably leave it for Super E to respond but just out of curiousity give me an example of a daily chart (of whatever you trade).
here's a chart showing exactly what i mean. yes, there are times when super_ego's method would work. however, look at this chart and all the times it wouldn't work. in real trading, we don't have hindsight, and would not know if the method is going to work or not. so say we took a bunch of his trades on this chart. you'd be f$%^ed. the black line is a 5sma.
ok, the first pic showed examples where you'd get chopped to death. this next pic shows when there IS a good trend, when it DOES pull back to the 5sma, it flies right through it! in the following pic, assume you would enter short at the pull back to the down sloping 5sma.
Gordon & Birddog, Yes I was long today. But no, it had nothing to do per se' with the daily's. Today guys it was all about hourly's. Let's go step by step. This mornings higher open was spillover buying from yesterday. Given that it was strength without news, it provided early evidence that bulls were trying to gain control. However in a bear market, especially in front of ecconomic data like this AM's ISM #, sellers will respond to higher prices. Then if on top of it you get a bad number (and not many releases this year haven't been bad)wham, you get a break. Now a reasonable short sale was through 820 as that had been the pre-opening and up to then days low. Overnight when Frankfurt opened Es traded quickly from 815-820. Good chance this would get filled in on penetration below 820 and it did. At the same time NQ, being it's typical laggard self was trying to decide whether it even wanted to hold YESTERDAYS LOWS. What a piece of shit that NQ is. So at that point SE has a decision to make. I only want to be short ES if NQ can take out yesterday. Also I'm looking at seasonality. SE don't know Gann but I can read a calender and I know first week of Oct. last year big rally off those post 9/11 lows. Also new quarter today after worst quarter since 1987. Dosen't mean there can't be selling pressure but I'm trying to be a bit constructive. Decide that 816.5 is as good a place as any to cover my 819 shorts and wait. And wait and wait and wait. Even watched a DVD. Cause now even though the stuff feels great, and I know it's gonna pop, I have to see something that tells me the time is right. Rallying above 820 is the first sign. I could've bought 'em then, because that meant to me that the chances of this being a traditional trend day down were diminished. But it is afterall a BEAR MARKET.So i wait, watching some really hot Lesbo stuff. Now what I want to see even more than those blonde muff divers is a trade above 825. Big time res. While I dig the 8ema in chop it's death and that was not gonna rock SE's world. Neither were 20 or 40. Too much higher. But by 12:30 this stuff was above everything on the 15min. and I merely placed a stp at 826.25 and watched the run for the roses. Unfortunately I got out a bit early, but still a 20 pt. trade puts me right there with Sarasota. I'm flat overnight, and IMO ES is just a tad overbought on a micro time frame. But I'd be looking long and hard at a test of the 20 day sma.
first of all, i don't believe you're the real "super_ego".....there's a dash in your name. second, thank you for making my point EXACTLY. a 5sma (or 8ema) will work when trending, but it won't in chop. THE TROUBLE IS, YOU DON'T KNOW WHEN THERE IS GOING TO BE TREND OR CHOP! so how do you know when to use the 5sma!?? as soon as you think there's a good trend to trade off the 5sma, chop could occur! then you switch to a chop system and it could trend again! this is why i said i agree with what oldtrader said. i don't see how you can just put a single moving average on a chart and make a fortune. there are times when it works and times it doesn't. unless you can predict the future, i don't see how you can trade effectively this way. another downfall is that i've heard chop occurs more than trend. super_ego's 5sma method deals with trend. so not only does it not always work in trends, it certainly won't work in chop...and chop is supposed to occur more frequently! but like i said, i don't think you're the real "super_ego" anyway......
Good commentary SE, I opened up the day short on Cisco once it broke the open price to the downside. Shorted and covered a few times made okay cash. Then at 10.17 the stock stands there. Big seller suddenly not selling anymore. Then it starts creeping above the 5ma (15 min chart). Put in a buy at 10.20 - get psyched out once it wiggles below the ma. then suddenly seller at 10.24 lifts his offer and I get long at 10.23 and 10.24. Stock moves to 10.40 in a hurry. So far good day up $1k. But then (and this is for you Gordon) I forget that the trend is my friend - try to get cute and guess a break of the 5ma back to the downside when it's only a penny below it. Bam offers get lifted and I'm out $700 - limping like a hyena. But I don't learn my lesson - yes I do it again and I'm out another $200 . Then I wake up, and say holy mackerel I'm trying to fade the 5ma. Get long way higher 10.70 (talk about paying up) and take out a quick 10 cent profit. End the day with a small profit. Moral of the story - WATCH THE 5MA AND DON'T BE ON THE WRONG SIDE OF IT - it's that simple. A big thanks to SE to pointing out that fact. I should have made major ca ching today - but I was sloppy and wasn't paying attention.
birddog, how can you not look at the 2 charts i posted and see that you can't trade off a 5sma alone? there are simply too many times when it doesn't work...and you have no idea when it will. please go back and see my 2 posts in this thread where i posted pics. when you look at them, look at each bar and pretend you can't see the next bars. ask yourself what you would have done at each bar according to SE...then you'll see how often you can get screwed. and you know what? never mind when it worked or not. would it have worked with stop and profit taking methods that you would use? if to trade a system like that, you need a strict stop method, would you even get some of the winners? also, look at some of the small moves. say you want to get whatever the market gives you, would you even get the big moves if you want a profit on the small moves too??