Yes, when i think about it, I do mean low pass ... but my real points were that: - the momentum interpretation is not wrong - tuning, as you suggested, is also not wrong And, despite all the crap talked in this and other threads, very little in trading is "wrong." The challenge is simply for the individual to use it in a way that generates a positive expectancy - the nay sayers simply couldn't do it themselves (including probably my own rejection of elliott waves). I'm not convinced that the output of one low pass filter minus the output of another lowpass filter is a bandpass filter. If a 12 period ma is filtering out frequencies above 1/12 (I cant be bothered going back to the math to find out what the response of an ema or sma might be) and the 26 period ma is filtering out frequencies below 1/26 I don't know how that implies that lower frequencies get attenuated strongly (which would be required for it to be a bandpass filter - ie attenuates high and low frequencies to allow a band through). Now you have my curiosity piqued. Can you show me how a lowpass minus a lowpass is a bandpass filter?
If you're interested, there's an interesting article in the January 2006 issue of "Technical Analysis of Stocks & Commodities" magazine: John Ehlers's "SWiss Army Knife Indicator" (SWAK). In the Traders' Tips section you'll find its coding for several platforms. Regarding the difference between two low-pass filters: their spectral difference is a true band-pass filter, but even if you do their difference in the time domain you'll get a pretty good filter as long as the two lags are close. Intuitively, filtering with a MA results in a smoother price like curve, with some delay. The longer the MA, the smoother the curve. Subtracting one from another will emphasize the smoothness difference between the two curves.
I modified the Wealth-Lab SWAK script for an EMA difference, and I applied it to a chirped sine wave. See attached.
LOL. I think you might be right (thought experiment of subtracting one filter from another giving a notch between the top and bottom suggests that you are) but to prove you wrong I'd have to spend hours getting out my old text books which is too hard. I'll concede Except of course on the issue of whether or not the macd is a form of momentum measurement
I know full well that TA is not the be all and end all ,,,but for short term trading which can be very profitable if you cannot make TA work for you then you need a new job. Simply bashing others who trade TA just shows your desperation at the markets in general. My suggestion would be to find a new line of work. here lets practice,,, "I'll have the veal marsarla with garlic mashed potatos and my wife will have the roasted lamb shanks". Hope that your new job pays wel
the basic flaws in TA You tell me what is meant by TA and I will tell you what are its flaws. nononsense
The debate probably will end if everyone traded the same way. On the contrary, each trader has his own biases, uses different indicators, sees the same chart differently, etc. So, why expect the same results? On the fundamental analysis side, the figures are only as good if they are accurate. Remember the accounting scandals of top companies? If you were relying on that information, wouldn't you be wrong? Take Enron for instance. Now, if you were looking at Enron's chart, while, Ken Lay and the other executives were egging on the small investors to buy----they were dumping stock!!! The insider figures would have told you (fundamental analysis) and the charts (technical analysis) would have told you that these guys were lying!!! I use a combination of technical and fundamental analysis for my longer term trades and just technical analysis for my shorter term trades.
I agree with this as well, the first part about indicators. If the chart backs up what the indicators are showing you, then is not your decision to trade re-inforced by that?