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Trading Truth Test: Do MA Crossovers Really Work?If you’ve ever sat up late at night watching tv, you may have seen an infomercial for software to become a day trader. They make trading sound so simple. Buy when a green arrow appears on the chart. Sell when a red arrow pops up. You’re snickering right now because you already know it doesn’t work. Yet so many traders talk about moving average (MA) crossovers in a similar way. Put a shorter time period MA (like 21 bars) on a chart and wait for it to cross above longer one (say, 50 bars) to buy. Do the opposite to sell. So how well does it really work? Let’s jump in and find out… Testing the Fabled Moving Average Crossover My 21/50 moving average crossover example above is a semi-common one people use. Of course there are others, like the 5/8, the 8/13 and the 13/21. 5, 8, 13 and 21 are all Fibonacci numbers, so people believe they have special powers. That’s probably a self-fulfilling prophecy since so many people use them. But that’s a test for another day. On to the rules!... The Trading Truth Test Setup Market: the S&P 500 index (using SPY to trade it) Timeframe: Jan 1, 2013 to January 31, 2023 Bar interval: 30 minutes. I chose 30-minute bars instead of the 2-minute or 5-minute bars many day traders use, just to smooth trends more. The less we can get caught in chops, the better. Moving averages: 21 and 50 bars (simple moving averages, meaning every gets equal weight, unlike with exponential) Starting Equity: $25,000 Max % of Equity Per Trade: 3% Commissions, fees and taxes. To keep things super simple, we’ll assume these are all zero. That’s borderline-realistic if you’re trading in a retirement account with a broker not charging commissions (you’d still have to pay exchange fees). The A/B Test Rules Rules for Test A This is the classic moving average crossing strategy. Whenever the 21 MA crosses above the 50 MA, buy. And every time the 21 MA crosses below the 50 MA, sell. That means, we exit whatever trade we’re in when we get the opposite signal… and then jump in going the other direction. Easy fo sheezy. Rules for Test B Everything is the same here, except for when we’ll take profits and losses. For this bad boy, we’re gonna use the 21-bar average true range (ATR) as both a trailing stop-loss and a trailing take-profit. Specifically, we’re using twice the 21-bar ATR (based on the previous bar’s closing price) for extra wiggle room. If we’re still in a trade when we get a new entry signal (MA crossover), we don’t take the trade. ‘Cause we’re rebels like that. One other quirk for Test B: if we hit a take-profit level in the same bar as a stop-loss target, I assumed we took the profit first. It didn’t make much difference overall, as we’ll see… The Test Results Before we see how Test A did vs Test B, the real baseline is just ye ol’ Buy and Hold. If you plunked your money into the S&P 500, your money would be worth 2.86 times as much by the end. Not bad for doing nada. So how did Test A do? No bueno. The ending equity after 10 years was only $25,091.74, which is barely breakeven. The one bright spot is the max drawdown, at 5.0%. It’s not hugely surprising, since MA crossover strategies are highly prone to losses when the market is chopping around instead of trending. And the market sloshes around way more than it trends. This pure strategy (only exiting a position on the next crossover) also tends to give back most profits, since it waits so long to exit. Given the take-profit targets and trailing stop-losses in Test B, how did we fare there? We ended with $27,261.39, a 9.0% return. Definitely better, especially given the 1.9% max drawdown, but nowhere near as good as buying and holding — especially when you factor in all the trading you’d have to do. What to Test Next Using some kind of trend indicator, like Super Trend or Linear Regression, to filter entry signals could help reduce losses. Picking a different market might also get us better results. For example, I saw someone on Youtube say the EUR-GBP forex market works well for MA crosses. Testing longer-period moving averages would also smooth the price action more and be less likely to cross as much in ranges.
SP:SPX
by TradingTruthseeker
2
Perfect BBands Strateg. w/ Indic. SetupThis one is for anybody looking to try a new consistently solid strategy with multiple intuitive indicators setup that is not automated - yet. But, since the strategy part of this setup relies mostly on a simple but effective BBands strategy (I've found best results with 15m), it shouldn't be that hard to get automation setup. As it is now, the indicators included in this setup work perfectly together to give even beginner traders a rather good idea of where the trend is going and when to enter/exit their trades. This is a great setup for those using a free TV account since it combines certain indicators together by making use of the Pine Editor. So technically, only 3 indicators/strategies are used. In this case, 2 indicators and 1 strategy. All features of the indicators combined in terms of being able to adjust settings for each can still be fine tuned and have not been negatively impacted by the merging of multiple indicators. If you like this setup or have any suggestions to improve it, please let me know and if you consider testing this out with automation - send me a private message and let's discuss it.
EEducation
by Y2K_B
BANKNIFTY : on daily supportBANKNIFTY closed is near major daily support level. Once it break we may see next daily support in coming days. Levels of daily, hourly & 15min timeframe marked on chart for today. Follow Price action & trend Like, Share, Comment for regular updates. Disclaimer I am not sebi registered analyst My studies are Educational purpose only Please consult with your Financial advisor before trading or investing I may be 100% wrong as its my personal trade. First Learn and then remove "L"
NSE:BANKNIFTY
by ChartsSpecialist
Thoughts About Selling Courses and Strategies Regarding the idea of selling courses and strategies online, I would like to share my thoughts with everyone for reference. (1) Successful traders usually don't lack money, and they are often unwilling to share the money-making tools they have developed through hard work and research. A few ambitious traders are willing to share their experience, knowledge, and even occasionally reveal their trading cards. Facebook provides many free high-quality resources. In addition, there are very few traders who are just starting out and hope to earn some extra income, but they do not treat trading as their main business. (2) If you find that a trader has been selling courses for more than five or ten years, you need to carefully evaluate whether they have really made money from the market. The power of compounding is frightening, and if they are capable, they should have made a fortune a long time ago. (3) In fact, trading is not just about having a profitable strategy. Taking futures as an example, most traders end up losing money, even though their strategies may not be the problem. Therefore, selling a fishing rod (strategy) without teaching how to use it is not enough to make you successful in trading. (4) I believe that trading, like any competitive sport, should have coaches. However, this culture seems to be lacking in the domestic market. Just like when I learned how to play Texas Hold'em, I sought out a coach to establish the correct concept. Otherwise, even if you succeed, it will only be a fluke, and if you fail, it will be common. Proper money management and psychological adjustment are more important than technical skills. I suggest that everyone can buy books on the market to learn on their own. If you can't even find a book to read, you may not be suitable for trading at all. If you encounter difficulties during the process of practicing what you have learned from the book, you can come to me for help as a coach. I am willing to help, but I also hope that you can donate the money you make in the future to those in need.
CME_MINI:NQ1!Education
by Eleta1228
1
TSLA Short - MyMI Option PlaysAfter breaking support around the $187s, we're now looking to see if it closes below those levels and continues to the downside of about $160. As most have pointed out, we still have a $154 Gap from Mid-Jan when TSLA begins the recovery in this longer-term downtrend that we've been in since the drop of the price from the $400s. So potential to see that Gap Filled of course before determining the moves forward. We will be looking for a potential bounce back to the upside during the Intraday Trading Session we will look to potentially enter some Shorts that are a little longer term to lower our Theta Drain while TSLA takes it time to make it back to those $160 Levels.
NASDAQ:TSLAShort
by MyMIWallet
Cash flow vibrationsIn the previous post we started to analyze the Cash flow statement. From it, we learned about the existence of three cash flows - operating cash flow, financial cash flow, and investment cash flow. Like three rivers, they fill the company's "lake of cash" (that is, they go with a "+" sign). However, there are three other rivers that flow out of our lake, preventing it from expanding indefinitely. What are their names? They have absolutely identical names: operating cash flow, financial cash flow, and investment cash flow (and they go with a "-" sign). Why so? Because all of the company's outgoing payments can also be divided into these three rivers: Operating payments include the purchase of raw materials, the payment of wages - everything related to the production and support of the product. Financial payments include repayment of debt and interest on it, payment of dividends, or buyback of shares from shareholders. Investment payments include the purchase of non-current assets (say, the purchase of additional buildings or shares in another company). If the inflows from the three rivers on the left are greater than the outflows into the rivers on the right, then our lake will increase in volume, meaning that the company's cash balances will grow. If the outflows into the three rivers on the right are greater than the inflows from the rivers on the left, the lake will become shallow and eventually dry up. So, the cash flow statement shows how much our lake has increased or decreased over the period (quarter or year). This report can be presented as four entries: Each value of A, B, and C is the difference between what came into our lake from the river and what flowed out of the lake by the river of the same name. That is, the value can be either positive or negative. How can we interpret the meanings of the different flows? Let's break down each of them. Operating cash flow . In a fundamentally strong company, it is the most stable and powerful river. The implication is that it should be the main source of "water" for our lake. Negative operating cash flow is an indicator of serious problems with the business because it means it is not generating money. Investment cash flow . This is the most unpredictable river, as sometimes it can be very powerful and sometimes it can flow like a thin trickle. This is due to the fact that the purchase or sale of non-current assets (recall that these may be buildings, equipment, shares in other companies) does not occur as regularly as operational activities. A sudden negative investment flow tells us about some big purchase. Shareholders do not always view such events positively, as they may consider it an unwise expenditure or a threat to dividend payments. Therefore, they may start to sell their shares, which causes their price to drop. If a big purchase is perceived as an opportunity to reach the next level and capture more market share, then we may see exactly the opposite effect - an increase in share price. Financial cash flow . A negative value of this cash flow can be seen as a very positive signal because it means that the company is either actively reducing its debt to creditors, or using the money to pay dividends, or spending the money to buy its own stock (*), or maybe all of these together. (*) Here you may ask, why would a company buy its own stock? Management sometimes does this when they are confident in the success of their business and want to support the growth of their stock. The company becomes a major buyer of its own stock for some time so that it begins to grow. The process itself is called share buyback . Positive financial cash flow, on the other hand, signals either an increase in debt or the sale of its own stock. As far as debt is concerned, you can't say that loans are bad for business. But there has to be a measure. But the sale by a company of its own shares is already an alarming signal to the current shareholders. It means that the company doesn't have enough money coming out of operating cash flow. There is another type of cash flow that is not a separate "river," but is used as information about how much cash the company has left to meet its obligations to creditors and shareholders. This is Free cash flow . It is simple to calculate: just subtract one of the components of the investment cash flow from the operating cash flow. This component is called Capital expenditures (often abbreviated as CAPEX). Capital expenditures include outgoing payments that go toward the purchase of non-current assets , such as land, buildings, equipment, etc. (Free cash flow = Operating cash flow - Capital expenditures) Free cash flow can be characterized as the "living" money that a company has created over a period, which can be used to repay loans, pay dividends, and buyback stocks from shareholders. If free cash flow is very weak or even negative, it is a reason for creditors, shareholders and investors to think about how the company is doing business. This concludes my discussion of the cash flow statement topic. Next time, let's talk about the magic ratios that you can get from a company's financial statements. They greatly facilitate the process of fundamental analysis and are widely used by investors around the world. We will talk about the so-called Financial Ratios . See you soon!
NASDAQ:AAPLEducation
by Be_Capy
Trading IMX in a Ranging MarketLet’s see how you can trade IMX in a ranging market successfully! What is ImmutableX IMX? ImmutableX IMX is the native cryptocurrency of the ImmutableX platform. ImmutableX is a layer-2 scaling solution for Ethereum, designed to offer fast and secure trading of non-fungible tokens (NFTs). ImmutableX uses the Ethereum network for security and settlement but offloads the heavy lifting of transaction processing and validation to its own layer-2 solution. ImmutableX aims to be the fastest and most secure way to trade NFTs on the Ethereum network. IMX's performance in 2022: IMX has had a good year so far, increasing about 200% since the start of the year. However, it is currently caught between two levels, which makes it an excellent candidate for range trading. Trading with the Relative Strength Index (RSI) indicator The Relative Strength Index (RSI) indicator is a momentum oscillator that measures the speed and change of price movements. It is used to determine when an asset is overbought or oversold. The RSI is usually an excellent choice to use on coins that are ranging. In this chart above, we traded with the RSI on the 1-Hour chart with the basic settings of Period 14, buy when the RSI is below 30 and sell when the RSI is above 70. This setup brought a profit of 89% since February 1st. This indicates that range trading with the RSI indicator can be a profitable strategy for IMX. Disclaimer: Please take into account that the RSI works well when the market is ranging. When the market is in a downtrend, it will start working significantly worse. Bottom Line: IMX showed significant growth in 2022, and is now ranging. The RSI indicator is a useful tool for trading IMX in its current-ranging market.
by cryptohopper
❌NO RISK OF LOSS=NO CHANCE OF GAIN✅ *️⃣There are several reasons why losses are part of the game: 1️⃣Emotion: Traders, just like all human being, are prone to emotional bias, which can lead to impulsive decision making and ultimately to losses. 2️⃣Probability: Even with the best trading strategy, there will be losing trades. It's important to remember that not all trades will be successful, and losses are a normal part of the process. A successful trader should aim to have more winning trades than losing ones. 3️⃣Markets are unpredictable: Even the most experienced traders can't predict market movements with 100% accuracy. Unforeseen events, such as natural disasters or major political announcements can cause sudden changes in market conditions, leading to losses. 4️⃣Risk is inherent in trading: All forms of investing involve some level of risk. In trading, the risk is even greater due to the fast-paced nature of the markets and the fact that positions are often held for shorter periods of time. 5️⃣There is no Holy grail strategy: There is no one strategy that will work in every market condition and for every trader. Different strategies work better in different market conditions, and a trader should be flexible and adaptable to changing market conditions. ▶️It's important to remember that losses are a normal part of trading, and traders should not be discouraged by them. Instead, traders should focus on managing risk, learning from losses, and continuing to develop and refine their trading strategies over time. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that
Education
by ProSignalsFx
10