Bilpritjr, reading in between the lines in Market Wizard, I am absolutely convinced that Mr Seykote uses cycle analysis. There isn't any two ways about that aspect of his trading. Yes, I know that he is putting a lot of work into trying to encourage and assist people to study the psychological side of trading but it is also obvious (to me at least) that he doesn't really want to bare all. And who can blame him for not wanting to shout the words 'cycle analysis' off the rooftops ? freealways
1. the 34ema was recommended by a mentor who has been using it to provide a living for his family for 6 years now. 2. sure, just pull up any chart on any market that moves. notice how if the price is just above the 34ema on the 1-min, but just below the 34ema on the 5-min. it tends to bounce around like a ping pong. sometimes it reverses back on the 1-min, b/c the longer term trend is with the 5-min, of course. 3. not exactly. this is the foundation of the strategy, and yes you could start out just trying this. but i have found that it is much more effective when you enter NEAR the 34ema, so you don't have to GUESS when your trade isn't working. the 34ema will tell you very quickly and accurately define your risk. notice that when it first crosses over the 34ema, it tends to pull back to it and bounce off of the 34ema a couple times before trending? this is your classic setup. you can also use the 34ema as an exit criteria, it works great. i tend to think that taking half profits at a target price, and then using the 34ema as a stop for the rest, is the best way to trade this system. you can use ADX, MACD, et al. to tweak your system if you want. I find that if I just stay away from 11:45-1 times I do pretty well. Don't let the ADX keep you out of the trade. I would suggest, rather, observing the market and determining the action yourself...always know the speed don't walk on the freeway and don't speed on a backstreet! best luck
You have been great in posting your tips for the 34PMA. You addressed time of day - what are the "other factors"?
Funky I believe we are referring to risk per dollar of profit. If you run a $300.00 stop 3 times a day to earn a thousand you risked $900.00 to make that thousand. Do you think it is the same risk if you run a $300.00 stop hold the trade for three weeks and make a thousand? Tharp gets into this. Have you read Tharp? Long-Term trading is just another stage you learn as you mature as a trader. Livermore teaches it in the early chapters of Reminiscences. I have a teacher that takes positions in futures contracts that he rolls over for years. It is part of seeing the big picture. I did testing using optimization over many futures markets. Short term. Medium term, long term and more. You can optimize history, but you cannot anticipate the future. Spend your time. Find your optimized results then run them and see if you can beat MACD in real time.
Guys, you are all barking at the wrong tree. A system using moving averages is unable to account for (or equal) the phenomenal success Mr Seykote has obtained (if the stories are true that is). [Please note that I am NOT disputing that one cannot make money using a set of moving averages. Just that it isn't enough to account for the spectacular successes of Mr Seykote. THAT can only be explained or understood if one accepts that he has an uncanny ability to anticipate tops and bottoms.] freealways
This depends on your timeframe as well. He is not a daytrader or even a swing trader. His timeframes are weeks to months. He does not have to catch bottoms or tops, it's enough that he catches 70% of the major trend.
Paul Tudor Jones in the same book said that trends only occur 15% of the time. Food for thought. Moreover, moving average tend to be overoptimized, i.e. curve-fitted. For example, what's the difference between 34 ema and 33 ema? What's the different between 34 ema and 30 ema?.... and so on.. you get the point.
This can be a problem if you trade only one market, but if you trade 7-8 or more then there is a high probability that there is always a trend that you can ride.