Alternative to MVA on RSI-8............
Without any disrespect for what you have achieved in your trading and this method for the Daily charts, I wish to propose an alternative to the MVA you are using ontop of the RSI-8.
I have researched this for a very long time and finally found some months back, that a combination of RSI-5 and RSI-14 placed ontop of each other, is superior to any other combination I have tried and I have tried yours from the day you posted it here for the simple reason that I am convinced that there is more to the Daily and H4-charts than meets my eye and my experience the past 6 years. You have been instrumental in opening my eyes and I thank you for that.
Having said that, I attach here a screen-print of my Daily chart and you will notice that your suggested RSI-8 is in the first window below the candles, followed by a 5/3/3 Stochastic and my idea of the RSI-5 overlaid on the RSI-14.
Note that on 15 June the indicators showed the LONG perfectly.
21 June the Stochastic 5/3/3 overheats and you can bet your bottom dollar that the price will either retrace or go sideways until the Sto has "reloaded" to go further. During this time it may have been prudent to stay out of the market or move your stops closer, but you would have been stopped out on the 27th of June anyway.
Re-entry would have been (for me) at the close of the candle of the 28th of June.
Your MVA on the RSI-8 did not show you what I saw on my charts, but better still, on the 2nd of July, my RSI-5 setting told me to get out as it was completely "overheated". One could have waited for the confirmation the next day, but that was unnecessary.
We could have gone SHORT on the opening of the candle on the 5th of July due to the Stochastics and the RSI-5 as well as the Doji the previous day.
I have noticed that in back-testing our strategies, the RSI-5 beats the RSI-8 and MVA every single time and is confirmed by the 5/3/3 Sto.
Once again, I do not wish to criticise you. It is merely an attempt at helping myself to improve my trading skills substantially.
Your comments will be much appreciated.
By no means do I take such a well-reasoned and thought out post as negative criticism. Thank you for sharing your thoughts and experience.
Personally, I am loathe to add new indicators on top of that which I already have. I use the 8and8 crosses primarily as back up to my price action study, which always takes precedence. That said, I will look into your preference for the two RSIs in the coming days to see if it helps me in my own trading.
I do tend to look at the overbought/sold postions of the RSI when entering a trade but never use it as a reason to exit - I've never been conviced by its effect on price.
Thanks again for sharing your ideas. Glad the book provided some stimulus in refining your own methods.
I've added a 14 CCI with a moving average of 8 and it seems to be a good signal too and filters the wrong crosses from RSI. If CCI and RSI crosses their EMA8, it seems to be a good move.
Thanks for sharing Daniel. Post a chart for all to see if you've got the time.
Follow-up on my previous post above.......
Michael, I am really indebted to you and again I do not wish to improve your method, but I just want to share my success here with you. You may want to rip your hair out when you see my chart, but just humour me.
The previous chart I showed the entry LONG on the 9th of July where the RSI-5 crossed the RSI-14 (and so did the Sto 5/3/3). As I am sold-out on the XO-indicator, I added it and I do not trade without a CCI and here I have added the 28/8 (your settings of your EMAs) with great results. Thank you again, I am a better trader for having studied your method.
thanks for the chart and explanation. can you explain how you use the cci with the ema settings 28/8.
How do we attach a picture?
If others feel happy with more indicators to give confidence in entering a trade, fair enough and it's great to have people posting their own take on the method.
As I said above, I don't add anything extra - the main indicator for me is price (s/r, fib lines, candle formations, dbl tops, round numbers) combined with the 8and8 cross. There is such a thing as indicator overload and for many new traders creates either a sense of paralysis or overconfidence.
I'd echo the above comment that if you're modifying a method, back & forward test to make sure it does actually add something.
I use picnac.com. Upload your file to there, copy and paste the URL into the image box on TSD.