Demark (TD) Moving Average

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winias
101
winias  

Hi everyone,

First off I just want to say that I'm not a fan of anything that lags, and that includes (most) moving averages. I had the luxury of using the below described at my last job, but not anymore. I was surprised to see that I couldn't find it anywhere for metatrader, so I was hoping someone might take interest. I'm not a programmer, but the logic for this seems very simple, and the results have been outstanding when I have used it; I would be thrilled if someone would like to tackle this.

During nontrending markets, the moving average is not displayed, but when a breakout opportunity is prevalent, the moving average is installed on the chart, and it can be used quite easily as a guide for the trend, a filter for false breakouts, as well as a strong indication for when to exit. The rules are fairly simple, and are explained as follows:

If a low has been formed that is GREATER than all previous 12 lows, then a 5 bar moving average of the lows is calculated for a period of 4 bars. If subsequent lows are greater than and previous 12 bar lows as well, then the process of calculating a 5 bar moving average of the lows for four bars forward (incl. current) is continued. Once this process fails to occur (13 day higher low), the moving average is extinguished. Reverse this logic for a moving average of the highs.

How to trade it:

For entry signals:

If a bar closes above an ACTIVE moving average of the highs, buy.

Reverse for sells.

For exit signals:

This is where it works best and can be used as a great addition to any trading system. The moving average will "hug" your trend. If, at any point, a bar closes above or below an active moving average, or the moving average vanishes, exit the position.

If anyone needs any more info please ask. I have tons. Would love to see this coded.

Successful trading,

S.

PS - Attached, lots of goodies for DeMark peoples. Dont have too much fun. Thx!

limestreamx
445
limestreamx  

hi winias

is this juz a raw idea? method? or u have try it? can u post a screenshot... i think i have the indi but i dont know how to use it

winias
101
winias  

Demark (td) Moving Average

Hi there,

DeMark wrote about it in his first two books, and its available on several other platforms. I would like to post a screenshot if I had one available but I unfortunately do not.

I'm not sure how this forum is about posting links, but if you Google "TD Moving Average", and look at the 3rd result down for Google books, click on it and scroll to page 248, you'll see a chart right from the book (its TD Moving Average 1). Do not click on the other links. They are to private vendors and the visual representation of the indicator on those sites are incorrect (they continuously display the moving average).

If you could help I would very grateful. Trading it is relatively easy, and accurate, especially if used in conjunction with his other indicators. I could help explain if you have any questions about it, or anything else of his.

limestreamx
445
limestreamx  

i only have TD trendline indicators .. but im not sure about the MA...

limestreamx
445
limestreamx  

can u please give me the link on that google search? i think im not quit understand what ur talking about. sorry..

Sergey Golubev
Moderator
106134
Sergey Golubev  

Threads about Demark on our forum.

Everything about DeMark:

- TD Sequential indicator with full documentation is here;

- Demark Auto Trader: EA for MT3;

- code of standard DeMarker indicator: small thread is here;

- Another Demark Trendline Trader: one indicator as trading system;

- Tom DeMark DIFF: one very good indicator;

- Demark documentation and code: documentation and code (Tradestation) for Demark indicators;

- All Demark indicators: here and here.

limestreamx
445
limestreamx  
newdigital:
Threads about Demark on our forum.

Everything about DeMark:

- TD Sequential indicator with full documentation is here;

- Demark Auto Trader: EA for MT3;

- code of standard DeMarker indicator: small thread is here;

- Another Demark Trendline Trader: one indicator as trading system;

- Tom DeMark DIFF: one very good indicator;

- Demark documentation and code: documentation and code (Tradestation) for Demark indicators;

- All Demark indicators: here and here.

i know mr ND will come and help... thats why i love this forum... so many helping hands in time of need. thanks mr ND

winias
101
winias  

Thanks

Thx New Dig....I actually saw this posting of yours in another thread but didn't find what I was looking for. The closest thing I came across is the Tradestation Manual with a desc. of the parameters only.

The document is attached among others in my first post. This isn't one of his indicators that grabs a lot of attention normally, but very effective. TD Camouflage (!!!) and TD REBO (for some killer pivot levels and breakouts) I also use pretty frequently.

So screw it I guess we're ok with the link posting so here it is:

New Market Timing Techniques ... - Google Book Search

Page 248 for the visual example. Its TD Moving Average 1 is the one I am referring to. If anyone knows or has some time please reply! Also, just for fun, I attached some stuff from BBG in my first posting for those that are interested:

Thanks!

jbfx
182
jbfx  

Sounds interesting about the TD Moving Average. I hope someone will code this up. What timeframe is good?

If I understand what you are trying to say, can we modify a simple moving average indicator, and only highlight the background of the 4 bars following the lower lows than the last 12 bars or higher highs than the last 12 bars. So it's kinda like a ghetto way of doing it, not pretty for sure.

But it seems like the coders like to do EA's and chase after holy grails.

So what is this other indicator to use in conjunction if you don't mind? I like to manually check your claims.

winias
101
winias  
jbfx:
Sounds interesting about the TD Moving Average. I hope someone will code this up. What timeframe is good?

If I understand what you are trying to say, can we modify a simple moving average indicator, and only highlight the background of the 4 bars following the lower lows than the last 12 bars or higher highs than the last 12 bars. So it's kinda like a ghetto way of doing it, not pretty for sure.

But it seems like the coders like to do EA's and chase after holy grails.

So what is this other indicator to use in conjunction if you don't mind? I like to manually check your claims.

Hi JBFX,

Thanks for the reply. The indicator can be used in any timeframe, but I dont personally trade anything other than 15 or 60 min for fx, maybe 30 min if I'm feeling adventurous . I use the moving average, mainly as an exit signal, though I do sometimes take entry based on valid breakouts (using simple 1-2-3 patterns, TD Sequential, TD Combo, TD Camoflage or TD lines with qualified breakouts). The only trouble with trading with this sometimesin the FX market is that to qualify an exit, for a trade that is already on, the bar must close above or below the moving average. Sometimes, but not all times, and due to the nature of the market, price will close for one bar below the average and scoop right back up. This is just the nature of this market, which is ultra-liquid (that's just trading, folks). I have found (but not 100%) that the occurrance is less frequent if you're trading commodity or index futures off of tick charts (where the bars are much more "rigid", if you know what I mean). In all cases, I just need to verify the breakout using any of the above mentioned or basic trend analysis on an even smaller timeframe. Either way, its still a solid function. Its saved my butt more than a few times.

The moving average has allowed me to keep positions open for extended periods of time that I would have normally closed earlier using other systems. Much better than a fixed trailing stop (I have found). I normally target 1.682 extention price targets using my main strategy, but will keep things open if (1) the moving average proves continuation and (2) leaving the position open is within my bounds of risk/reward.

To manually verify its results, you can just set up an SMA of the highs and lows and do the count manually. Thats what I've been doing so far. You'll see what I mean in regards to its effectiveness over trailing SL's (though you should always have some SL or reverse order in place somewhere). As with ANY indicator, BEWARE the spike entry :0. Thats why I favor breakout strategies. A good little trick I use is to take the full range over the 4 previous bars (highest high minus lowest low). If the current bar is greater than that entire range, and you want to take a trade in the direction of the spike, watch out. You're usually primed for a retracement. Not always the case, but this has saved me lots of $.

I dunno. Just some ideas to swirl around. But I love questions. Always looking for smart ideas.

Thanks!

S.

jbfx
182
jbfx  

I looked at the TD MA manually for the exit or stoploss because I'm more interested in stoploss aspect of this indicator. It's decent.

There are still spike that will take you out too early, but I can't find any stops that would keep you in the trade on false spikes. Just the nature of the beast.

So far, my preferred method is still Elder's stops. He talked about it in one of his books. The stops are huge though, so most people probably won't like the horrible risk:reward ratio. I just don't like to get my stops hunted down by the brokers, I figure I keep it big and keep it hidden. I like the chandelier exit as well, nice and wide.

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