Advisor to trade on commodity markets Lendri David is the head of the firm to manage money "Sentive Trading" and head of hedge fund "Harvest Capital Management". David Lendri has a lot of copyright trading systems, including the breakthrough 2 / 20 EMA and the method of explosion variability. His research has links to several books, such as books Connors advanced trading strategies "and" Basic Principles of computerized trading techniques for beginners. "
"Cup with handle"
A cup with handle (1) is a major turning models, which often precedes a great rally. It is formed after the instrument market sold off, to reason, and then begins to rise, creating a "cup". After the increase, the price is slightly reduced, forming a "handle" model. According to William O'Neill, who promote this model, the best candidates for the model of "cup with handle" are those who have already demonstrated a strong rally. One way to measure the "strong rally" is to use the 50-day Moving Average.
Figure 1: Model of "cup with handle. Please note that "cup" is formed at and above 50-day moving average.
While market-based instruments remain above 50-day moving average, it can be considered as being in the medium-term upward trend. Therefore, the model "cup with handle", which was formed at or above 50-day moving average, is called "escaping" as the market continues to "run away", while a model. The point of this model is that it unites the formation grounds / correction in trend. (for details, see "model" cup with handle "at number 34)
Growth Centers
As mentioned above, the 50-day Simple Moving Average provides the levels at which to look, many institutional and large traders. Jeff Cooper observed that "market-based instruments will be traded around its 50-day moving average a certain amount of time, without warning, and then break up or down. This spurt often occurs during at least several days:" (2). In line with its strategy to look for the day with the most wide range, which occurs in a market instrument that is traded at its 50-day moving average, and then try to enter the market in the direction of travel on that day.
Figure 2: Growth Centers. The plants are to enter the market in the direction of motion in the day with a wide range of 50-day moving average.
Bowl Holy Grail
In the book "Masters of Wall Street", Connors and Raška showed that the market, developing the strong trends are often restored to the moving average before the confirmation of its trend. This makes sense, since markets often commit tremor / correction, and then pushing again - like a model of rollback. In essence, the strategy is to find markets, developing a strong trend, displayed a high ADX, accompanied by the restoration of 20-periodnoy exponential moving average. They jokingly call this model "The Holy Grail Cup."
Figure 3: The Holy Grail Cup. The model seeks to capitalize on the renewal of a strong trend as shown by high values of ADX, after the restoration of the rolling average.
Breakthroughs "daylight"
Often, the markets will be traded around the moving averages. They will have a small rally (or decline) and then return to its moving average. This is known as a return to average. In the event that the market tried to escape to freedom and begins to trend of the rolling average. If you are looking for long-term systems are following the trend for commodity markets, I noticed that these trends or breakthroughs from the moving averages are often preceded by at least two days during which the minimum (for the rising trend) or maximum (for a descending trend) is not able to touch moving average. This "gap" above and below the moving average has been named as one trader "Daylight," because you can see "daylight" between the price and the bar moving average. The initial system, the breakthrough 2/20-dnevnaya EMA (3), used a 20-day exponential Moving Average and is shown below in Figure 1. As soon as a qualified signal input, a warrant for the purchase has been placed above the two-bar maximum. Short selling overturns. Installations for the model shown in figure 4 for the February 2000 Gold Comex.
Figure 1: The installation of the entrance under the 2 / 20 EMA
Figure 4: February Comex Gold.
Please note that the breakthrough 2 / 20 EMA (or breakthroughs "daylight") require that the market traded above the two-bar maximum for opening long positions and two-bar below the minimum for short positions. If the market is unable to overcome these points, it should stay out of the market. Like most systems are following the trends, breakthroughs "daylight" are prone to large recessions (losses) when the trade is simply because the markets are in a trend of approximately 30% of the time. However, when the system is used selectively (in the control of conditions), in conjunction with the management of money and / or additional technical indicators (for the definition of a strong trend), it can be a very useful tool. Also, you might consider changing the length and types of moving averages that are used depending on your style of trading. For example, short-term traders may consider using a 10-periodnoy moving average, while long-term traders may prefer the Moving Average of 50 or more periods.
Conclusion
We examined the interaction of moving average to the graphical models and examples of methods of trading based on the moving average. It should be remembered that there are different types of moving averages - simple, weighted, exponential, and a wide range of periods moving average. None of the species can not be uniquely identified better or worse. The same applies to the choice of models and methods of trade. In different circumstances, could be better, or those other methods. All depends on the type of market, trading style and personal preferences. I would recommend that you explore the different types of moving averages and the above methods. Change them by themselves or create their own methods.
"Cup with handle"
A cup with handle (1) is a major turning models, which often precedes a great rally. It is formed after the instrument market sold off, to reason, and then begins to rise, creating a "cup". After the increase, the price is slightly reduced, forming a "handle" model. According to William O'Neill, who promote this model, the best candidates for the model of "cup with handle" are those who have already demonstrated a strong rally. One way to measure the "strong rally" is to use the 50-day Moving Average.
Figure 1: Model of "cup with handle. Please note that "cup" is formed at and above 50-day moving average.While market-based instruments remain above 50-day moving average, it can be considered as being in the medium-term upward trend. Therefore, the model "cup with handle", which was formed at or above 50-day moving average, is called "escaping" as the market continues to "run away", while a model. The point of this model is that it unites the formation grounds / correction in trend. (for details, see "model" cup with handle "at number 34)
Growth Centers
As mentioned above, the 50-day Simple Moving Average provides the levels at which to look, many institutional and large traders. Jeff Cooper observed that "market-based instruments will be traded around its 50-day moving average a certain amount of time, without warning, and then break up or down. This spurt often occurs during at least several days:" (2). In line with its strategy to look for the day with the most wide range, which occurs in a market instrument that is traded at its 50-day moving average, and then try to enter the market in the direction of travel on that day.
Figure 2: Growth Centers. The plants are to enter the market in the direction of motion in the day with a wide range of 50-day moving average.Bowl Holy Grail
In the book "Masters of Wall Street", Connors and Raška showed that the market, developing the strong trends are often restored to the moving average before the confirmation of its trend. This makes sense, since markets often commit tremor / correction, and then pushing again - like a model of rollback. In essence, the strategy is to find markets, developing a strong trend, displayed a high ADX, accompanied by the restoration of 20-periodnoy exponential moving average. They jokingly call this model "The Holy Grail Cup."
Figure 3: The Holy Grail Cup. The model seeks to capitalize on the renewal of a strong trend as shown by high values of ADX, after the restoration of the rolling average.Breakthroughs "daylight"
Often, the markets will be traded around the moving averages. They will have a small rally (or decline) and then return to its moving average. This is known as a return to average. In the event that the market tried to escape to freedom and begins to trend of the rolling average. If you are looking for long-term systems are following the trend for commodity markets, I noticed that these trends or breakthroughs from the moving averages are often preceded by at least two days during which the minimum (for the rising trend) or maximum (for a descending trend) is not able to touch moving average. This "gap" above and below the moving average has been named as one trader "Daylight," because you can see "daylight" between the price and the bar moving average. The initial system, the breakthrough 2/20-dnevnaya EMA (3), used a 20-day exponential Moving Average and is shown below in Figure 1. As soon as a qualified signal input, a warrant for the purchase has been placed above the two-bar maximum. Short selling overturns. Installations for the model shown in figure 4 for the February 2000 Gold Comex.
Figure 1: The installation of the entrance under the 2 / 20 EMA
Figure 4: February Comex Gold.
Please note that the breakthrough 2 / 20 EMA (or breakthroughs "daylight") require that the market traded above the two-bar maximum for opening long positions and two-bar below the minimum for short positions. If the market is unable to overcome these points, it should stay out of the market. Like most systems are following the trends, breakthroughs "daylight" are prone to large recessions (losses) when the trade is simply because the markets are in a trend of approximately 30% of the time. However, when the system is used selectively (in the control of conditions), in conjunction with the management of money and / or additional technical indicators (for the definition of a strong trend), it can be a very useful tool. Also, you might consider changing the length and types of moving averages that are used depending on your style of trading. For example, short-term traders may consider using a 10-periodnoy moving average, while long-term traders may prefer the Moving Average of 50 or more periods.
Conclusion
We examined the interaction of moving average to the graphical models and examples of methods of trading based on the moving average. It should be remembered that there are different types of moving averages - simple, weighted, exponential, and a wide range of periods moving average. None of the species can not be uniquely identified better or worse. The same applies to the choice of models and methods of trade. In different circumstances, could be better, or those other methods. All depends on the type of market, trading style and personal preferences. I would recommend that you explore the different types of moving averages and the above methods. Change them by themselves or create their own methods.
Forex Magazine
based on www.hardrightedge.com
based on www.hardrightedge.com
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