A new look at old things

"With over 18 years experience in the casino and detours the whole world, I decided that it was time to stop and focus on my passion for trading on financial markets. It took several years to move from a casual one-time investment to the regular daily commerce. Being an active trader I regularly conduct seminars on trade. At the moment I finished his book "Trading for Beginners." In fact, every trader has experimented with various types of moving averages. In this article I would like to invite you to look at the intersection of the various methods of moving averages, which I found are a very good way to determine the short-term change of trend. As we know, Moving averages are usually constructed by using the closing price bar. For example, if you build a 3-periodnye Moving averages, you would add the last three closed and the total value divided by three to get a simple moving average cost. Now I want to offer you a slightly different approach. I have always been a supporter to take the traditional approach and experiment by changing it. What if we try to use the price of the bar instead of opening the closure and what, if used for a sliding closure medium and the opening to the other? First, most graphics programs allow you to use to open, maximum, minimum, or close to build a moving average. In the example below, the daily schedule of "Dow Jones", I used a 5-periodnuyu exponential sliding average closing price and 6-periodnuyu exponential Moving Average price discovery. As you can see, this combination allows you to effectively catch the short-term change of trend.

In the following example, the time schedule of EUR / USD, you can see that the combination of indoor / outdoor work really well. Of course, in any market there are periods of consolidation and in this case, if you used any method of moving averages, there will be quick turn. To avoid this, you should use some type of filter or approach that will help you to refrain from dealings with a low probability.


You can use the ADX, Stochastics and MACD as a tool to help you filter out market noise, as I use the addition of other structures of the time.


In the following example, 4-hour schedule of GBP / USD you can see that on 24 th September 2004. at 4:00 was the intersection of the 5-periodnoy exponential moving average closing price above 6-periodnoy exponential moving average of prices of opening.


Although the signal was at 4-hour scale to help identify the best entry point, you can move to a smaller time scale, such as a 30-minute schedule. As you can see, the 30-minute schedule was quite a lot of crossings of the 5-periodnoy


exponential moving average of opening price is higher or lower than 6-periodnoy exponential moving average closing price. There are many ways to trade on the combination of moving averages, but the most balanced approach is that, having received the signal at large time scale, then move to a smaller scale and wait for rollback. The first signal after the downgrade to a smaller time scale is usually a pretty good entry point. If it was up to the crossing of large time scales, it should move to a smaller time scale and wait for when the market will recover and then give another buy signal (intersection of the top). To signal the sale is just the opposite approach.

Once you get a signal at a short time scale, depending on the location of the support you need, as a rule, place your first stop, the warrant under the closest level of support. If the market starts to move in your direction, you can move your stop-order in a way that he followed the market, are placed under the most recent level of support.

In this article I used the exponential Moving Average, but I also experimented with different types of moving averages - balanced, smooth, simple, etc. You can also experiment with different lengths of moving averages.

Forex Magazine
based on www.tradejuice.com