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9 and 18 SMA's - Commodities trading
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9 and 18 SMA's - Commodities trading

  #1 (permalink)
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9 and 18 SMA's - Commodities trading

Anyone out there taking note of the nine and eighteen day Simple Moving Averages with regards to commodities trading?

I am currently long in Soybeans.

I would love to engage in any conversation with anyone who is interested in this topic.

Send me a private message or discuss it on the board.

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e4williams View Post
Anyone out there taking note of the nine and eighteen day Simple Moving Averages with regards to commodities trading?

I am currently long in Soybeans.

I would love to engage in any conversation with anyone who is interested in this topic.

Send me a private message or discuss it on the board.

A combination of moving averages like that is not very useful. Make sure you've read this thread:

https://futures.io/traders-hideout/7364-random-line-theory.html

And watched this webinar, which does a better job illustrating my point:

https://futures.io/traders-hideout/35189-webinar-quantitative-discretionary-trader-art-science-w-adam-grimes.html

Mike

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  #4 (permalink)
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e4Williams,

I think using a range of moving averages to help you visualize how price is behaving is useful, but to blindly enter off the moving averages is not a positive expected value outcome. It's not that they can't work, but the question is when do they work and when do they not work?

If it works maybe because some big bank desk trader decides to execute his order at that exact price that 9 SMA was at, then prices will probably hold and continue to trend. But if that desk trader was off to lunch and there was no automated program that kicked in to buy at that 9 SMA, then your strategy fails at that point.

So a more useful strategy to confirm the entry and exits, will probably be tracking if other people are joining into the market with you at the price that you want.

I personally use a ribbon of moving averages on my charts to help me see how aggressive buyers/sellers are moving in on pull backs, but the actual trade triggers occur regardless of what is happening with the moving averages. If anything, the SMA acts as a helpful alert of when to start paying attention, but it is not a primary condition for entry.

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9 and 18 Ma's RE: futures


MacroNinja View Post
e4Williams,

I think using a range of moving averages to help you visualize how price is behaving is useful, but to blindly enter off the moving averages is not a positive expected value outcome. It's not that they can't work, but the question is when do they work and when do they not work?

If it works maybe because some big bank desk trader decides to execute his order at that exact price that 9 SMA was at, then prices will probably hold and continue to trend. But if that desk trader was off to lunch and there was no automated program that kicked in to buy at that 9 SMA, then your strategy fails at that point.

So a more useful strategy to confirm the entry and exits, will probably be tracking if other people are joining into the market with you at the price that you want.

I personally use a ribbon of moving averages on my charts to help me see how aggressive buyers/sellers are moving in on pull backs, but the actual trade triggers occur regardless of what is happening with the moving averages. If anything, the SMA acts as a helpful alert of when to start paying attention, but it is not a primary condition for entry.

No, you got me, entirely wrong here. I am not talking about entry. And yet, at the same time, I am talking about entry. I am talking about how the commodity behaves.
Understanding how the particular commodity or future you are trading behaves.

That is where I am at with my discussion of 9 and 18 SMA's. Not about entry or exiting a trade, specifically. But about the behavior of the commodity or future in relation to the 9 and 18 SMA's, and yes, I do think that there is a high relevance and I do think a smart trader would be aware of this relevance.

And I think many a trader could do far worse than the crossover of the 9 SMA to the 18 SMA. But It depends on the time frame you are looking at. A crossover of the 9 SMA to the 18 SMA on a two hour chart ain't a bad starting place to do some TA from. But you can dig deeper. How can one, personally, make make a better entry than the 9 crossing the 18 on a two hour chart. So dig in and figure that out. Not a bad starting place to dig in deeper with more technical analysis.

For example, the low just put in on soybeans. Soybeans leading up to that low, which was right on a trend line had to cross down through the 50 MA, cross down through the 18 MA, and cross down though the 9 MA before presenting it's entry point. After hitting the low. and where the very best entry presented itself. Soybeans, then proceeded to cross upwards on both the 9 and the 18 SMA's.

It seems to me that moving averages are not much paid attention to. They're quite simple and they don't cost any money to use. Ha Ha!

And believe it or not, I think that on a five minute chart the crossing of the 50 SMA marked the beginning of an uptrend for Soybeans, you have to go back a few days for that. You can get quite specific with a moving average depending on what time frame you are looking at.

Whether or not I am right, I don't know. But the simple rule is if price is above the 50 SMA you are in an uptrend, if you are below the 50 SMA you are in a downtrend.

So, to sum it up, I see the crossovers as a starting point for more technical analysis, and then ask one's self. How can I do better than that crossover with regards to entry and exit.


Last edited by e4williams; March 24th, 2015 at 08:02 PM.
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e4williams View Post
No, you got me, entirely wrong here. I am not talking about entry. And yet, at the same time, I am talking about entry. I am talking about how the commodity behaves.
Understanding how the particular commodity or future you are trading behaves.

That is where I am at with my discussion of 9 and 18 SMA's. Not about entry or exiting a trade, specifically. But about the behavior of the commodity or future in relation to the 9 and 18 SMA's, and yes, I do think that there is a high relevance and I do think a smart trader would be aware of this relevance.

And I think many a trader could do far worse than the crossover of the 9 SMA to the 18 SMA. But It depends on the time frame you are looking at. A crossover of the 9 SMA to the 18 SMA on a two hour chart ain't a bad starting place to do some TA from. But you can dig deeper. How can one, personally, make make a better entry than the 9 crossing the 18 on a two hour chart. So dig in and figure that out. Not a bad starting place to dig in deeper with more technical analysis.

For example, the low just put in on soybeans. Soybeans leading up to that low, which was right on a trend line had to cross down through the 50 MA, cross down through the 18 MA, and cross down though the 9 MA before presenting it's entry point. After hitting the low. and where the very best entry presented itself. Soybeans, then proceeded to cross upwards on both the 9 and the 18 SMA's.

It seems to me that moving averages are not much paid attention to. They're quite simple and they don't cost any money to use. Ha Ha!

And believe it or not, I think that on a five minute chart the crossing of the 50 SMA marked the beginning of an uptrend for Soybeans, you have to go back a few days for that. You can get quite specific with a moving average depending on what time frame you are looking at.

Whether or not I am right, I don't know. But the simple rule is if price is above the 50 SMA you are in an uptrend, if you are below the 50 SMA you are in a downtrend.

So, to sum it up, I see the crossovers as a starting point for more technical analysis, and then ask one's self. How can I do better than that crossover with regards to entry and exit.

Hi there,

No offence what so ever.

You are where i was 5 years ago.
I understand where you are coming from. Moving average is just a average of prices, you can put any moving average in a chart anytime frame and think wow look that bounce and support.

MA is used to forcast price and not trade, example.
Market opens and we see 200 tick spike on euro. on a daily chart we have 50 sma

for analysis lets say euro is now 1.1200. and 50 SMA is 1.0950.

the information we get from that setup is, on a 50 day average the price should have been around 1.0950. not 1.1200.
this means few things.
- some thing has changed in the marker, what is it ?
- when the price trades around the MA it has already moved half of its trend. ( in other words too late to take a good ratio trade.)


Last edited by Lawrencejude; March 24th, 2015 at 11:19 PM.
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  #7 (permalink)
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18 SMA 50 SMA crossover


Lawrencejude View Post
Hi there,

No offence what so ever.

You are where i was 5 years ago.
I understand where you are coming from. Moving average is just a average of prices, you can put any moving average in a chart anytime frame and think wow look that bounce and support.

MA is used to forcast price and not trade, example.
Market opens and we see 200 tick spike on euro. on a daily chart we have 50 sma

for analysis lets say euro is now 1.1200. and 50 SMA is 1.0950.

the information we get from that setup is, on a 50 day average the price should have been around 1.0950. not 1.1200.
this means few things.
- some thing has changed in the marker, what is it ?
- when the price trades around the MA it has already moved half of its trend. ( in other words too late to take a good ratio trade.)

I will disagree with you here. You are right on a daily, 12 hour or 8 hour chart when the instrument crosses the fifty you are too late.

But I will challenge you as to calling entry using the crossover the 18 SMA through the 50 SMA, however this must be on an hourly chart. Go to the last two major tops on the e-mini and you tell me if you have a better call as to entry for the e-mini than this particular crossover??

I think any entry before this hourly crossover is just guessing the top and not a safe entry.

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Lawrencejude View Post
Hi there,

No offence what so ever.

You are where i was 5 years ago.
I understand where you are coming from. Moving average is just a average of prices, you can put any moving average in a chart anytime frame and think wow look that bounce and support.

MA is used to forcast price and not trade, example.
Market opens and we see 200 tick spike on euro. on a daily chart we have 50 sma

for analysis lets say euro is now 1.1200. and 50 SMA is 1.0950.

the information we get from that setup is, on a 50 day average the price should have been around 1.0950. not 1.1200.
this means few things.
- some thing has changed in the marker, what is it - when the price trades around the MA it has already moved half of its trend. ( in other words too late to take a good ratio trade.)


No, offence to you either, but I am not sure you didn't throw the baby out with the bath water five years ago with regards to moving averages.

Right now I am keeping the baby in the bath water, the baby being moving averages, until proven otherwise and so far they are holding up pretty good for me.

And I am not talking much about daily moving averages, rather I am talking executing a trade with moving averages off of an hourly chart, and then monitoring the progress of the trade from a two hour chart, all using and watching the 9 18 and 50 SMA's.

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e4williams View Post
Right now I am keeping the baby in the bath water, the baby being moving averages, until proven otherwise and so far they are holding up pretty good for me.

You can be proven otherwise by watching some of the webinars on futures.io (formerly BMT), starting with this one:

https://futures.io/traders-hideout/35189-webinar-quantitative-discretionary-trader-art-science-w-adam-grimes.html

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
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Help using the forum? Watch this video to learn general tips on using the site.

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  #10 (permalink)
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Also read this book, Evidence Based Technical Analysis by David Aronson to be further proven wrong about moving averages and indicators

http://www.amazon.com/Evidence-Based-Technical-Analysis-Scientific-Statistical/d...based+technical+analysis

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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