When the opjective of trading is to make money it is best to keep it simple. Taking the full offer of the market is complex. I transfer surpluses of taking the full offer of the market to position type trading (See attached). The delay of considering "normal" signals from EMA's or EMA crossovers of price , is not a necessary inefficiency. I keep it simpler than your comments indicate. I just use quality* stocks and signals directly from the independent variable. * one click of a seven element filter for 15,000 stocks.
Here is how I like to use moving averages. It might not be your cup of tea but it seems to work for me. I use 2 moving averages of different lengths. One that simulates the short term trend and one that simulates the intermediate term trend. Then I can see how the 2 moving averages weave in an out. Then you can start anticipating turns which coincides with double bottoms, double tops, inverted head and shoulders...etc of technical analysis.
I have hard time understanding your posts. Could you explain the headings and the numbers in the table? I think I got the idea of what you want to say, but the data inside is not explained. For instance, you say it is unusual volume. How come then that the cumulative is only 100% of the 65 average? The other columns (particularly the last 3) need explanations. What are those numbers, how are they useful, and how to use them?
I spent 20 minutes dictating the table. Excel was used. 1. I divided the day into 30 minute infromation bundles. (13) 2. I assigned portions of the daily volume to the 13 bundles. I did this by intuiting how the daily catenary works. As you see there is a resemblance to a four degree polynomial I had been using the rule set for about 35 years so this effort was easy. (doubling in position trading every 40 some days) 3. I asked that we set up an Excel spread sheet with 13 rows plus headers. 4. the numbers on the volume catenary chart were transferred to the Excel. The rows were ID'ed by time and zones (left side of chart) The headers use terminology for the independent variable. DU means Dry Up. the volume is the volume in The Pattern at score 7 of The Pattern. Sorting a Universe is done by platforms. One such has a column named by someone (I do not know who). His view of volume was that at times stocks had unusual volumes. Since they did they could be filtered for making money. He is correct. If and when a so rt is done the scores of The Pattern are differentiated automatically. The Pattern is scored by signifcant variables in their declining significance: Price, Volume, and A/D. the binary values are converted to base 10. Increasing and A are 1 and decreasing and D are 0's. Hence The Pattern has 8 scores for the market cycle. DU is 0, FRV is 7 and Peaking is reached at 4 going to 3. To make trading very profitable, it is important to know a stock is going to go up, before it begins to go up. this eliminates a thing in CW called "risk". Also to make money fastest it is good to enter late and leave early. All of this is explained in a document ET cannot handle. the document is called "putting the Piees Together". It is also in a video from which the document was transcsribed and illustrated. All of the trading was done in a real account. I invented The Pattern and scoring before I dictated the one pager for position trading using a filtered Universe. I nvented the filter as well. 5. The columns DU, FRV and Peaking were not hard to do. The volume and the cummulative volume came frome copying values and just adding the new value to the prior row to get cummulative. I am sorry you had difficulty with these things. 6. The columns DU, FRV and Peaking came from multipliers of the cummulative volume. I invented the multipliers by speaking them aloud. The values are color coded as you see. I did this to let a user see which rules were use where. 7. The independent varialbe leads the dependent variable by 1 1/2 hours. 8. A persom kaes a HOT LIST. He watches the hot list unusual volume which equals cummulative daily volume divided by 65 day average volume. 9. On the buy day, he sees in FRV column that DU is reached in a few 30 minute periods. He has 1 1/2 hours to buy at a dull unchanging price. 10. Filtered stocks go 20% in a few days. He takes 10% (half of the swing). the sell is when the peaking volume FAILS to keep up. This is around the fourth to sixth day. So you can read the whole detailed illustrated story or view me speaking it to a group of about 70. they asked Q's and such and their is humor. the audience is from all over the US because they fly in every two weeks for a two hour spiel. As you see this is simple and the performance is above average since most approaches do not double every 40 days like this one does. I am amazed to hear that you could not fathom the one pager. Fifth grades have been able to use it with the wall street journal daily data. they are usually a day late going in and going out. they make up thier Universes by reading the various columns of the listings. I admit the kids were in a prep school and they were offsprings of the Hollywood mileaux As time went by, a team (the PhD's) decided to check out the one pager by taking a 400,000 element sample. Nothing was changed.
Two line theory is magic. It was invented before the PC. for me, this is where the invention of OOE's cam from. The weaving is a six elment OOE. The originators (before PC's) of two line theory used approapriate naming devices: MACD and stochastics. I remember when these inventions had to be resynch'ed with the advent of the PC. humoursly, it took four years on his lecture circuit to adapt to the new settings. Synchronicity of indicators is way beyond ET. For a while Wikipedia was fairly good at being contemporary, but a lot of turkeys have returned it to the dust bin. there is no way any indicator can generate signals if it is not synchronized to the market it is measuring. Ho HUM for ET.
What?? An indicator is either good (making you money consistently) or bad, end of story. Ok, the forex market just opened, let's get busy...
Once you have been around for a while you may catch on. Notice you are trading a market where the independent variable is NOT available. Not knowing how to synchronize indicator is common among risk takers and those who are quant oriented. There is this stuff out there that says success is making 20% a year. Its cool for you to keep your mind closed.
Could you maybe elaborate on the 6 OOEs? Even though i vowed never to touch the ES again, Do the MAs change for intraday ES...5 min 4 trends a day for M W days compared to position trading stocks?
All of two line theory is based upon the syncronized realtionship of two expressions. Moving Average Convergence Divergence (MACD) was developed and designed BEFORE the modern computer era. In 1957, I used 024 or 026 card punches to prepare data for use on the 700 series IBM mainframes. There were 17 instructions at that time. Real time data prosessing was just being invented for airline ticketing (SABRE). So what did the indicator inventors discover before computers. Contrary to the SPM seen on ET a few years back (it used a mistaken signal....LOL); it was seen and understood that trends could be managed on a go/no go basis. Hence the limits set on MACD and Stochastics. Further, the indicators were well synchronized. Today, most of ET does not understand indicator design and operation. Converting an indicator to a level of making money most effectively and efficiently means that the indicator must at all times be generating signals. These signals have to be understood as well. By working carefully it is esy to understand the triad: convergence, crossover and divergence of two lines. Using a formula to create the lines breaches mathematical rigour but this failure is SOP in averaging. Moving avergaing is just an add/delete expression. Again mathematical rigour is violated when more than one trend is mixed together. If you add a vector orientation to the crossover, then you have a "confirming" signal of sentiment. It is "how" the "fast" line crosses the "slow" line. The other three elemnts in the OOE are Min, Max and failure to cross. The second triad group is Divergence, Min or Max, Convergence. This is the sequential measure of trends reching maximum money velocity. For many years a popular thing was periodic analysis. This is NOT time series analysis (which doe not work). So it was common to monitor and analyze with respect to the trading cycle having first and second derivatives. (this works quite nicely with stats equivalents of calculus). Velez and his crew were proponents of "failure to crossover inserted inplace of crossover. This is a valid signal BUT .... This repeated triad is a good monitoring and analysis tool for those who monitor intermediate term nalysis of stocks the drift to attiaan change in price. Drift looks like this: con>>fail to X>>>div>> Max>>>> converge>>>failto cross>>>> Div >>>> max>>> converge>>> x over. The above is for a long drift. The money velocity in drift is not great. This resembles buy and hold but with just drift trending. Holding a stock with an PS and RS of 80 or more gives the same result. I will put up my left and right screens for using leading indicators of price. The two line stuff is on the right screen. There are different go/no go signals for each of the three indicators on the right.(see heavier horizontal lines to be broken and see histogram as well (color coded))