I will agree that MAs do not work as a predictive indicator in their own right, stand alone. They are the very definition of lagging indicators, which all indicators are. But combined with trader knowledge and a few other indicating bits, absent any news, they can help show what most markets are likely to do "most of the time". In that vein, they have predictive power on the probability of their next move, based on the previous moves. But with that Angry Orange in office, I would not attempt it. Hell, we are nearing cycle number 3 of the trade/Fed thing. Cycle 1 started on May 5th. Cycle 2 started on Aug 1st. Cycle 3, barring any shit fits from this shit face in the oval office, is going to be next Wed, the Fed rate decision. It will be very very sad if we get near the ATH next week, and then Trump twits some falderal about how unhappy he is with Powell, and we drop 5% from there. It is not that it is untradeable, it is just that it is getting so old. It almost all seems illegal. Is he really manipulating the economy for his own gain? The SEC should be investigating this by now. The IRS nailed Al Capone on tax-evasion way-back-when. Time to put Orangeface under that same microscope.
padutrader, I understand fully what you are trying to do and that is : Use Price Action Entry methods to trade with the trend to increase your odds of sucessful winning trade. Using EMA removes doubts and second guess personally How do you plan to exit your trades?
padutrader, You mentioned the key two words "Less subjectivity". EMAs offer less subjectivity and logical repeatable decisoin making. Is your thought process to identify trend with EMAs and then use price action to enter and exit trades?
For those of you using EMAs, try using this formula as an alternative calculation to reduce the group delay of the filter: alpha = 2/(N+1), where N is your lookback period EMA = alpha*(price[0]+k*(price[0]-EMA[1]))+(1-alpha)*EMA[1] where k is a gain factor you choose. I suggest values in the range 0.5 to 1.5. John Ehlers has the complete algorithm to dynamically adjust k. Lookup his zerolag filter.
thanks this is at least something specific and not vague like many of the 'this is useless' or 'my pro boys they jump and down and market goes up and down'
this thread was posted in the journal section. i think everyone missed that. it is not a discussion on the relative merits of moving averages.
try this put a 4 ema. buy :set up bar is a close above the ema. entry is if the high is taken out. context a strong downtrend. opposite for sells
i used the above to go long the 4 ema is the white line.exit will be on the bar that breaks the low of the bar that closes below the 4 ema. the context is not a strong down trend so not perfect but i used a bit of price action too to enter. this worked alright but the probability was little less because the context was not perfect