StockFetcher Forums · Filter Exchange · LONGER TERM ANALYSIS OF EMA CROSSOVERS ON THE SPY<< 1 2 3 >>Post Follow-up
Kevin_in_GA
4,548 posts
msg #88685
Ignore Kevin_in_GA
2/24/2010 9:04:36 PM

Frankly I'm a little surprised at the lack of response to my post. I guess I shouldn't be. Many people tend to dismiss the simplicity of my approach as too simple. Yet my approach will beat the pants off of any MA crossover system or price crossing above/below an MA EVERY TIME. If you had been paying attention to a simple monthly bar chart with volume and major support and resistance levels you would have seen obvious distribution in volume and price at the 2000 and 2007 highs which coincidentally were at the nearly the same price level. Likewise, in March 2009 the decline was stopped on huge institutional buying at nearly the same price levels of the 2003 bull market. Go ahead and ignore me. I'll continue to profit.
+++++++++

I am syill trying to figure your trading signals here - you can't just say "this made a double bottom" on this date, since you would not know it was a bottom until much later.

If you are saying "the SPX made a series of lower lows and lower highs on increased volume, then a BUY signal was generated on the first month where the high was higher than the previous month (also on higher volume) ...." that I could maybe see how to trade.

No offense intended, but I just don't see how the three points you cite as outputs of your system were identified. Can you elaborate?

raviram80
30 posts
msg #88698
Ignore raviram80
2/25/2010 1:09:58 AM

Hi Kevin ,

I am a new trader but understand the technicals. I see the entry points as you mentioned for the EMA crossovers. Can you tell me what could I set as stop losses for these trades? How do I decide stop losses for these? AND actually when should I exit out of these trades, ?

I am sorry if I am asking simple questions

Kevin_in_GA
4,548 posts
msg #88705
Ignore Kevin_in_GA
2/25/2010 8:47:01 AM

Hi Kevin ,

I am a new trader but understand the technicals. I see the entry points as you mentioned for the EMA crossovers. Can you tell me what could I set as stop losses for these trades? How do I decide stop losses for these? AND actually when should I exit out of these trades, ?

I am sorry if I am asking simple questions
+++++++++++++

Always ask simple questions first. Not a problem.

1. No stop losses were incorporated into these analyses. I simply bought at the close on the day the EMA(10) crossed above the EMA(50), and sold the on the reverse. The strategy basically requires you to flip from SPY to SH (the inverse ETF fro the S&P) at the close of the day of the cross. That's all.

2. Exits are determined (again) by the ema cross. You are fully invested in the market 100% of the time - hopefully catching the trend correctly more often than not.

NOTE: This is an analysis, nothing more. I wanted to test this approach, and may very well trade off of it if it works consistently. I am not advocating others do so, but at least they should review it and provide thoughtful critique.

fortyfour
185 posts
msg #88717
Ignore fortyfour
2/25/2010 10:09:58 AM

Kevin,

I believe trend traders have brass balls.. Analysis, study, belief that what they are doing has a positive
expectancy and the ability to weather the storm........drawdowns ...... a win percentage maybe 30-40%.....giving
back a lot from max profit....ALL for catching the monster trend and handling that in the correct manner ( not selling quick).

All the above factors can be moderated to personal distress levels but it remains a difficult pursuit..

Miy chicken soup input is......

Test your stop and reverse in a market that does not trend for say two years.....

The killer is that you must "take" all these signals because you dont know when the next crossover is the beginning of the
next monster move.

Include non correlated markets if you can......(put a gun to my head and I am LONG oil for the next 10 years), financials etc...

Who knows you may end up owning the Red Sox or another team like that trend trader guy...dont remember his name.

Good luck.



raviram80
30 posts
msg #88721
Ignore raviram80
2/25/2010 11:07:13 AM

Thanks Kevin,fortyfour.

Kevin, if you don't use this filter, is there any other specific one that you trade with. I would like to test it out

duke56468
683 posts
msg #88725
Ignore duke56468
2/25/2010 1:18:13 PM


- Ignore maxreturn
modified 2/24/2010 7:27:41 PM

Frankly I'm a little surprised at the lack of response to my post. I guess I shouldn't be. Many people tend to dismiss the simplicity of my approach as too simple. Yet my approach will beat the pants off of any MA crossover system or price crossing above/below an MA EVERY TIME. If you had been paying attention to a simple monthly bar chart with volume and major support and resistance levels you would have seen obvious distribution in volume and price at the 2000 and 2007 highs which coincidentally were at the nearly the same price level. Likewise, in March 2009 the decline was stopped on huge institutional buying at nearly the same price levels of the 2003 bull market. Go ahead and ignore me. I'll continue to profit.


Max.....What is your system telling us to do right now? Thanks

Radiomuse
288 posts
msg #88744
Ignore Radiomuse
modified
2/25/2010 5:27:52 PM

This is an interesting thread - thanks to Kevin for the backtesting, and I agree with Fortyfour about the "brass balls" and nuances of this (and a lot of systems) where the catch is you gotta take every trade to make sure you get the big winners.

Just wondering if anyone trades a similar crossover system - but instead of just basing it on the 10/50 ma cross (for example), you would do this instead...
- if ma(10) is above ma(50), go long when price is above ma(10). Cover when price drops back below ma(10).
- if ma(10) is below ma(50), go short when price is below ma(10). Cover when price goes back above ma(10).

Let's not clutter this up with discussion of a double-top/double-bottom system. Someone can start another thread for that :)

raviram80
30 posts
msg #88746
Ignore raviram80
2/25/2010 5:45:42 PM

Radiomouse,

Is this possible to automate in some online trading? I use optionshouse and this is not possible

maxreturn
745 posts
msg #88749
Ignore maxreturn
modified
2/25/2010 6:06:01 PM

Kevin, while I didn't give specific rules for confirming double tops/double bottoms the fact is that most SPX bull/bear markets reverse when a double bottom/top sets up. When you learn how to analyze price and volume action, particularly at major support and resistance points, you'll be far ahead of the crowd. In March, 2003 I think we can all agree that a potential double bottom was in place. Now look at the volume from the time period October, 2002 to March, 2003. It was abundantly clear to me that on the March, 2003 bar that the bulls were winning. Actual confirmation was not received for another couple of months until resistance levels were cleared but the point is...commit a decent percentage of your bankroll to the bull side. Then go all in when it's confirmed. In November of 2007 we again had a potential double top set up...again with volume confirmation...and at/near the 2000 highs. What do you think the probabilities were that at LEAST a decent down side correction was in place? Finally, in March 2009 we again had a double bottom set up. Look at the huge up volume in March, 2009. Also note that at the time of the reversal, price had just taken out the 2003 bull market low. Again, what do you think the probabilities were of at least a large bear market correction? HTH

Max

maxreturn
745 posts
msg #88751
Ignore maxreturn
2/25/2010 6:13:36 PM

Duke, right now the monthly bars and volume tell me that we're still in a bull market but price isn't making much headway. Currently the Feb, 2009 price bar is bullish but volume is unimpressive. What I would like to see for the bull to continue is the February bar closing bullish above 1150 on higher volume than the January bar. I see no case for the bear side until we get a double top with volume confirmation OR a monthly bar closes below 1000 on high volume.

StockFetcher Forums · Filter Exchange · LONGER TERM ANALYSIS OF EMA CROSSOVERS ON THE SPY<< 1 2 3 >>Post Follow-up

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