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Why Not to Trade MA Crossovers..

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  • Why Not to Trade MA Crossovers..

    Hello,

    Guy, ever wondered why your crossover plans sometimes fails??

    - Cross over does not mean the market is turning... does it? Remember this is comparison of 2 MA of different period not what the price is doing..
    - Best way to trade the cross over wait for the cross and confirm the trend by having the 2 MA running all most in Parallel and widening this means we have a strong trend..

    Hope this observation will help someone.

    Regards

  • #2
    Re: Why Not to Trade MA Crossovers..

    Originally posted by sabtron
    ... Best way to trade the cross over wait for the cross and confirm the trend by having the 2 MA running all most in Parallel and widening this means we have a strong trend...
    That's MACD. MACD changes sign on the crossover, and increasing MACD indicates divergence of two MAs or decreasing indicates convergence, hence it's name.
    regards

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    • #3
      Re: Why Not to Trade MA Crossovers..

      thank you indo-investasi... now i become a better trader...
      Last edited by dr0o69; 07-08-10, 01:23.

      Comment


      • #4
        Re: Why Not to Trade MA Crossovers..

        basic problem with ma cross is the cross comes too late after price has already done its thing and also ma cross will kill you in a ranging market. First problem can be handled by entering not on a cross but when price moves convincingly above or below both MA's (need a good momentum filter) - second problem can be handled by your favorite trend filter - or only taking signals in the direction of the longer term trend.

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        • #5
          Re: Why Not to Trade MA Crossovers..

          whats the best value for moving averages ? is a cross over at 50 considered reliable indicator of a change of direction ?

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          • #6
            Re: Why Not to Trade MA Crossovers..

            MA cross strategy work good on trending market only, but will fail on ranging market

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            • #7
              Re: Why Not to Trade MA Crossovers..

              Don't trade MA, they're so lagging.

              Comment


              • #8
                Re: Why Not to Trade MA Crossovers..

                Clarence Chee from T3B Forex introduces modified MA in his
                trading system especially PIPS Intraday Trading System.
                He calls it HMA (Hull Moving Average). It is designed to be
                used with other trend identification indicator and to be applied
                on H1 time frame. It seems quite succesful.

                Just around the other corner, I prefer to study Price Action
                rather than depending on indicators. Price action gives you first hand
                info about what is happening in the market before to be translated
                into indicators.

                Since I don't like to baby sitting the computer's monitor, I practise
                swing trading and go in depth with studying price action. Indicator
                plays a very minimal role in my trading decision. I just use indicator
                to gauge the short term and long term trend. My entry and exit points
                are never based on indicators.

                It's just personal preference. Nothing to do with right or wrong.
                Trading is a probability game.

                Comment


                • #9
                  Re: Why Not to Trade MA Crossovers..

                  Originally posted by nrnak
                  whats the best value for moving averages ? is a cross over at 50 considered reliable indicator of a change of direction ?
                  Unfortunately, there is no a best value. All values exhibit the same behavior.

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                  • #10
                    Re: Why Not to Trade MA Crossovers..

                    ....................
                    Last edited by luke4p; 24-01-13, 23:26.

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                    • #11
                      Re: Why Not to Trade MA Crossovers..

                      I used to run a free EA from Forex-tsd called "Universal MA Crossover";it failed terribly in ranging market.
                      Even with a third MA as a filter it still failed.I tried a lot of other filters like RSI or Ema Angle,still no success.
                      I've been looking for a good filter going with 2 MA crossover but haven't found one yet and if I do I think we can use
                      that one alone;we don't need the 2 MA crossing

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                      • #12
                        Re: Why Not to Trade MA Crossovers..

                        5SMA,16EMA,160EMA

                        Comment


                        • #13
                          Re: Why Not to Trade MA Crossovers..

                          Originally posted by kawase
                          5SMA,16EMA,160EMA
                          I would use the 160 as SMA, why would you want the give more weight to the last bars when you are "averaging" 160 periods, doesn't make sense for me.

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                          • #14
                            Re: Why Not to Trade MA Crossovers..

                            I like to use the cross of 5sma over 1o ema for entry and the cross of 3ema over 5ema for exits.
                            Works quite well

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                            • #15
                              Re: Why Not to Trade MA Crossovers..

                              Crosses like 5 EMA Close and 8 EMA Open work quite well

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