Guppy multiple moving average trading

[linkon7]

linkon

i appreciate your honest efforts to impart learning - a lot

charts were educational, i don't know what is wrong with me but when it comes to observing divergence, maybe i had tried million indicators before just settling watching price action around ma's.

well, i am keen on looking for what EXIT plans you have in your system to get out of a position.

i have learnt in these 2 years of trading to focus greatly on EXITS as they mark a position as profit & loss. trailing stoplosses are helpful but usually i seek short ma's bubble disappearing in long ma's to EXIT a position i have been sticking to for a while.

which charting software is that ?

regards as always
rishi

problem with divergence is that people expect every divergence to work. what we compare is basically momentum on price vrs momentum on oscilator. Its not simple as price making lower low oscilator made higher low, so buy...!

when we trade we have to keep in mind that indicators are derived info. one has to read momentum on price first. By that i mean range extension followed by correction and again range extension. We compare this with its equivalent on rsi. basic assumption here is... momentum always precedes action on price.

Exits is very tricky as there is never a trader who has mastered his exits. Thats partly offset with the risk adjustment that we make on a trade by defining the stoploss and then partial exits / add ons depending on how we feel the current price action appears to us. This is where it gets very subjective and individual risk tolerance dictates their trade management.

personally, i like to make my trades free as soon as possible and only then i feel comfy riding a position to eternity as i know worst case scenario, the trade will be an scratch trade. Thats why i prefer trading options as i get to adjust my risk.

 

[Rkji]

linkon,

when i started trading i use to look for fancy indicatiors & entries through them, now i just look for exits & risk management.

with guppy, entries are fine tuned, but i want you to define your exit strategies, since we are trend trading for longer periods.

some of the exits, i have used are :

1) 2 % gain in position - stocks
2) price touched a particular ma
3) trailing stoploss

i do not intend to trade less than daily timeframe for stocks & 4 hrs in forex.

regards
rishi

 

[linkon7]

Exits are far more difficult to master than entry/direction/stoploss. A perfect exit is only possible on hindsight.

My method of deciding the exit depends on what phase of the market we are.

If we are in a sideways phase, then the guppy longer term ema will be clustering together. such scenario means price is bracketed and neither bulls nor bears want to initiate positions. they both want to only react to extreme price. so my trading system will be a fade the extreme. Here i have to show a leap of faith as most of the time, my entries are without confirmation based on leading indicators. prefered entry zone is a failure to break a known support / resistance. My objective is to exit 50% of my position at a location that will make the other 50% free if stoploss is hit. 2 std deviation from the 20 ma is my preferred exit for all my position.

When in trend, the long term guppy mma will be nicely spaced. my entry location hardly matters as long as trend is strong and linear. Here exit objective is to ride the trend till the next known support resistance. Divergence is also a strong reason to exit.

One of my favorite way of minimizing risk is to use options in combination of futures.

 

[NTrader42]

Hi Rishi, Linkon

Nice thread hope we will keep getting updates

Thanks

 

[4xpipcounter]

Linkon, I got a question for you.
First, your ichimoku thread was excellent. I've recommended it to many. The ichimoku is the cornerstone of my methodology, but your thread was a concentrated effort for the ichimoku only. I think it is also enlightening that after people visit my thread, then they visit yours and find alternate ways to use the ichimoku, and they also understand how versatile the indicator is.

BTW, Rishi, I'm already enjoying your methodology, and it looks like I'm sticking around here for awhile.

My question to Linkon are you like me, inasmuch that you have your own methodological approach to the markets, but also like studying and dabbling in other methodologies? I also noticed you are well-versed talking about anything outside the ichimoku, which is another reason for my query.

 

[4xpipcounter]

Rishi, I'm not a fan of crossover methods, which is going to make your thread even more interesting for me.
How does your guppy method account for sideways markets? Most crossover systems looks good on paper, but is another story when it comes to a tradeable equivalent.
Any rate, consider me a happy student in your classroom, and I'll be doing my homework.

 

[linkon7]

Linkon, I got a question for you.
First, your ichimoku thread was excellent. I've recommended it to many. The ichimoku is the cornerstone of my methodology, but your thread was a concentrated effort for the ichimoku only. I think it is also enlightening that after people visit my thread, then they visit yours and find alternate ways to use the ichimoku, and they also understand how versatile the indicator is.

BTW, Rishi, I'm already enjoying your methodology, and it looks like I'm sticking around here for awhile.

My question to Linkon are you like me, inasmuch that you have your own methodological approach to the markets, but also like studying and dabbling in other methodologies? I also noticed you are well-versed talking about anything outside the ichimoku, which is another reason for my query.

I enjoy dissecting and dismantling systems. 90% of the time, i know its an useless errand as i wont trade it anyway. I have my own complex setup which is semi mechanical and has become second nature for me. But once in a blue moon, a dismantled system gives an idea that i toy around for few days.

Funny thing is, at the end of all this exercise, i find TA useless. Market will remain irrational and no amount of objective definition can help unless we focus on money / trade management. If we can get our trade management right, we just need an average system with positive expectancy.... to make a living from this market..!

 

[4xpipcounter]

I can see we are the same in the 1st paragraph and share a bit of a dissenting view in your 2nd

I also like to look at other trading systems, dissect them and try and interpret through them the market direction.

TA's useless? Ouch! I find everything else useless except my TA's. I view the markets as a rhythmic flow with only occasional irrationality. We do agree on money management. Without it, no matter how good our approach or views of the markets may be, we are a cooked goose without it.

I enjoy dissecting and dismantling systems. 90% of the time, i know its an useless errand as i wont trade it anyway. I have my own complex setup which is semi mechanical and has become second nature for me. But once in a blue moon, a dismantled system gives an idea that i toy around for few days.

Funny thing is, at the end of all this exercise, i find TA useless. Market will remain irrational and no amount of objective definition can help unless we focus on money / trade management. If we can get our trade management right, we just need an average system with positive expectancy.... to make a living from this market..!

 

[Rkji]

paul,

i am quite touched with your humble attitude towards learning from others to whom you can teach a thing or two any day

paul, just like you found in linkon's thread another way to trade ichimoku, let me tell you that i do NOT trade crossovers & guppy mma is looked upon as floating S & R lines.

if you have read the thread, ' The Dance' in forex factory, you would relate to my approach.

it's about short term moving averages being looked upon as traders & long term moving averages being investors, when they meet, it means both kind of traders have agreed upon a common value, thereafter you need to see how they dominate each other. once short term traders cross above long term investors & long term investors group ma's have decent seperation in them, it means overall trend is strong & you need to look for entries when short term traders would come near long term & about to retain original move.

i have two charts for you :-

paul, look at ' A ', that is my usual setup, though some may trade ' B '

in the above image, 2,3,4 are my idol setups though some trade 1 which is a crossover

i hate to type, but i know it's worth explaining to you

please check my next post regarding your sideways market query


regards
rishi

Rishi, I'm not a fan of crossover methods, which is going to make your thread even more interesting for me.
How does your guppy method account for sideways markets? Most crossover systems looks good on paper, but is another story when it comes to a tradeable equivalent.
Any rate, consider me a happy student in your classroom, and I'll be doing my homework.

 

[4xpipcounter]

That is interesting your perspective on how you use your MA's. Tomorrow I am going to plot them on some separate charts just to see how they will act.

It is also interesting that you would enter after the trend has been largely vested. I assume your view may be that by the time it gets to point A, the trend has already made up its mind, and even though the brunt of the trend has been completed it is better to cash in on a more sure entry.

Thanks for your explanation. In lieu of your disdain for typing, it is especially appreciated.

paul,

i am quite touched with your humble attitude towards learning from others to whom you can teach a thing or two any day

paul, just like you found in linkon's thread another way to trade ichimoku, let me tell you that i do NOT trade crossovers & guppy mma is looked upon as floating S & R lines.

if you have read the thread, ' The Dance' in forex factory, you would relate to my approach.

it's about short term moving averages being looked upon as traders & long term moving averages being investors, when they meet, it means both kind of traders have agreed upon a common value, thereafter you need to see how they dominate each other. once short term traders cross above long term investors & long term investors group ma's have decent seperation in them, it means overall trend is strong & you need to look for entries when short term traders would come near long term & about to retain original move.

i have two charts for you :-

paul, look at ' A ', that is my usual setup, though some may trade ' B '

in the above image, 2,3,4 are my idol setups though some trade 1 which is a crossover

i hate to type, but i know it's worth explaining to you

please check my next post regarding your sideways market query


regards
rishi