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zeTrade 2016.06.22 22:12  

Okay :) here's one in the spirit of not having defined SL and TP values!

I use the difference between 2 moving averages just after they cross, to make sure the cross have good momentum.

So if I subtract the slow MA to the fast MA, on the 4 hour chart I get let's say 150 points.

The same equation on a cross (that appears the same visually) on the 1 hour TF, I get 40 points.

Of course! A candle on the 4h TF contains way more points than one on the 1h TF.

I feel the answer lies in fractions but I'm not sure how?

Like, the difference divided by the price of the slow MA which would give a percentage?

or does it lies in standard deviations?

Thanks :)

graziani 2016.06.23 18:21  

As already said, MA is important as it is transformation of Price Action into a continuous function.

But now stop and think. What does MA present? And what would cross of two different MAs present?

And then, what does difference between 2 MAs present? Is it momentum?

And then lets go one step back: what do you actually want to achieve? And how?


How good are you with mathematics? Well, you should know at least the basics of (EDIT: calculus) infinitesimal accounting (pardon my french, I've learned maths in my mother tongue so this is just a direct translation, it might be called different in english).

So let's take H1 TF for presentation, for calculation you will of course take M1 TF. 

Lets say we are interested in e.g. daily and weekly PA trends. So we choose SMA 24 and SMA 120 in case we have a 5 candles week.

Now we will take first derivative of SMAs and see what we got. You know of course, what first derivative of function represents? :)

After looking at the graph you should realize:

1) MA value itself carries 0 information 

2) Cross is completely irrelevant

3) MA inclination and inflection points are important  (derivative value)

4) trends are important

5) MA derivatives carry trend information as it is of course inclination value of the MA curve

Besides this, are you familiar with stochastic concepts like unpredictability and uniqueness of every moment? :)

Take a look at Elliot wave theory before going on, think about trends, about support & resistance, about achieving high RRR, about true source of information (PA and fundamental values of currencies), what are you trying to achieve and who else is involved here...

You will need some time to contemplate all this, measured in months/years.

zeTrade 2016.06.24 19:36  
This is where I PM you ;)
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