Moving Average in a non-trending market

lohiya · #1 30th December 2006, 01:44 AM

Hi
Many of us use strategies build directly on MAs(crossover etc.) or oscillators based on MAs directly. I found a lively eg. depicting an inherent flaw(which of course we understand through experience) :
http://powerswings.com/2006/12/20/moving-averages/

thnx

karthikmarar · #2 30th December 2006, 10:24 AM

Hi Lohiya

Sure, a trend following system especially a MA cross over system will whipsaw during ranging market. So we should switch strategies when the market changes from trending to ranging. Now this is the difficult part. First it will maybe late before we relialize the change in the market. Second, even during a trending market their may be prief period of ranging before resumption of the trend.

So the ideas should be to first indentify whether the market is trending or ranging.

Any good Trend following system should keep one out of the market during ranging market. I have tried to use many strategies using ADX, RAVI, close above last high pivot and a AMA biased by ADX/RAVI etc to reduce whipsaws.
However we can never eliminate them and they are part and parcel of any trend following system.

regards

Karthik

Linus · #3 30th December 2006, 10:55 AM

That was a good one Lohiya

gvnarendra · #4 30th December 2006, 11:51 AM

Quote:

Originally Posted by karthikmarar

Hi Lohiya

Sure, a trend following system especially a MA cross over system will whipsaw during ranging market. So we should switch strategies when the market changes from trending to ranging. Now this is the difficult part. First it will maybe late before we relialize the change in the market. Second, even during a trending market their may be prief period of ranging before resumption of the trend.

So the ideas should be to first indentify whether the market is trending or ranging.

Any good Trend following system should keep one out of the market during ranging market. I have tried to use many strategies using ADX, RAVI, close above last high pivot and a AMA biased by ADX/RAVI etc to reduce whipsaws.
However we can never eliminate them and they are part and parcel of any trend following system.

regards

Karthik

Hi karthikmarar,
It is true most of the indicators fail in non trending markets. But with the help of Elliotwave I think we can analyse the market position and trade accordingly. The difficult part of Elliotwave is to understand where we are in the market at a particular time. So I think we need a good education in Elliotwave. Hope some of the Elliottitians in our forum help others learn the basics as well as the advanced concepts of Elliotwave theory.
gvnarendra

lohiya · #5 30th December 2006, 12:01 PM

Quote:

Originally Posted by gvnarendra

Hi karthikmarar,
It is true most of the indicators fail in non trending markets. But with the help of Elliotwave I think we can analyse the market position and trade accordingly. The difficult part of Elliotwave is to understand where we are in the market at a particular time. So I think we need a good education in Elliotwave. Hope some of the Elliottitians in our forum help others learn the basics as well as the advanced concepts of Elliotwave theory.
gvnarendra

Hi
Elliot Waves is what I rely for deciding wether the market will be facing whipsaws or moving in a trend. More so it gives a good idea how strong the tend will be. EW are sadly underestimated by many.
Cheers!

lohiya · #6 30th December 2006, 12:13 PM

Quote:

Originally Posted by karthikmarar

Any good Trend following system should keep one out of the market during ranging market. I have tried to use many strategies using ADX, RAVI, close above last high pivot and a AMA biased by ADX/RAVI etc to reduce whipsaws.
However we can never eliminate them and they are part and parcel of any trend following system.
regards
Karthik

Yes Sir, the trouble I cant escape is about the judgment whether a market will be trending or not

. EW help me in that but than thats a discretionary setup. Trying hard to get mechanical, did little work on a expert.
Warm Regards

jatayoo · #7 30th December 2006, 05:54 PM

Quote:

Originally Posted by lohiya

Yes Sir, the trouble I cant escape is about the judgment whether a market will be trending or not

. EW help me in that but than thats a discretionary setup. Trying hard to get mechanical, did little work on a expert.
Warm Regards

---------------------------------------------------------------------------Dear Lohiya
I have been following the thread since the morning and i do realise the difficulty in giving a satisfactory answewr that one can beleive in based on his practicle experience.
Construction of Gann Charts helps immensly,but i have done it for the long term only.Gann has written about 3 day charts as well for such like situations but frankly i have not tried them out over such time frames.Yes, over long term they are correct.
Secondly,their is no use in trying to reduce PROBABILITY to ZERO.This probability thing was designed by God and you cannot do anything about it.
"The moving hand writes and
having writ
Not all your words can cancel a line
Nor all your tears wash out a word of it."
----------------------------------------------- REGARDS,JATAYOO.

trader111 · #8 30th December 2006, 06:15 PM

Quote:

Originally Posted by jatayoo

Secondly,their is no use in trying to reduce PROBABILITY to ZERO.This probability thing was designed by God and you cannot do anything about it.
"The moving hand writes and
having writ
Not all your words can cancel a line
Nor all your tears wash out a word of it."
----------------------------------------------- REGARDS,JATAYOO.

Where most of the people trip off is trying to make the probability even better than random

BTW if possible plz tell me what the prose means... bounces off my head

Best Regards.

trader111 · #9 30th December 2006, 06:16 PM

Quote:

Originally Posted by lohiya

Yes Sir, the trouble I cant escape is about the judgment whether a market will be trending or not

. EW help me in that but than thats a discretionary setup. Trying hard to get mechanical, did little work on a expert.
Warm Regards

Me too using EW.. but yes what is not appreciable is that that is a very discretionary setup.

Regards.

jatayoo · #10 30th December 2006, 06:54 PM

Dear trader111
What the prose means is that it is futile to reduce or attemt to reduce probability to a fixed return instrument.We cannot define it or understand it to such mathematical precision.It has to be lived with.hence the hand of god bit.In buisness you say "force majure".

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