Valuable Tips in Forex Trading

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Forex Trading - How to Succeed
For instance, there are MACD (Moving Average
Convergence/Divergence ), Alligator, Awesome
Oscillator, CCI (Commodity Channel Index), Moving
Average Envelopes, Moving Average of Oscillator,
Bollinger Bands, Stochastic Oscillator, etc. All
such indices are based on MA. When developing
such indices, the authors issued from MA. Further
each of them added to this basis what he liked.
It could be the rate of change in the price, the
trading volume, the closing price value with
respect to the previous data, etc. Who has added
what to MA does not make a secret. One can learn
it, for instance, from MetaTrader software
engineers from MetaQuotes Software Corp. What a
drawback is inherent in the notion of MA itself -
so that they must be infinitely (and to no
effect) be improved, being unusable in their
original form? Hence, a large number of
professionals waste their time, understanding
that the indices available are unusable. You can
judge by yourself. Let us put oscillators at the
foot (bottom) of the chart.
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One can pick them out of one's choice - even all
of them. In practice, all charts demonstrate the
same. That is, each of newer designers has
realized the drawbacks in the work of his
predecessor. However, an original oscillator,
developed by every new specialist, indicates the
same data as oscillators developed by a previous
author. Problem 5. According to J. Murphy, the
following approach is axiomatic in the framework
of the classical Forex (see "Technical analysis
of future markets" Part 9). The point of
entering the deal is the crossing of a slower MA
by a quicker one. For instance, if MA 10
intersects MA 40 top-down, this corresponds to
opening a deal on "sell". I can give thousands of
examples when the deal opening in accordance with
this formula was too late. This can happen in the
cases of the trend strategic/tactical correction
- especially under the conditions of strategic
reversals. Otherwise, the deal opening according
to this formula can be erroneous (fallacious) -
in a flat.
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The above-given charts illustrate some cases when
the opening according to this formula is wrong.
Thus, a vicious circle becomes developed. On the
one hand, the period length must be taken into
account in order to exclude the "market noise"
influence. On the other hand, one must consider
the delay in MA as compared with real changes in
the market. This problem is still unsolved. The
higher is MA number (100, 200), the weaker is MA
reaction to the "market noise". At the same time,
the delay in MA during reversals is more
considerable. The smaller is MA number (5, 10),
the more intensive is MA reaction to the "market
noise". That is, an ordinary (common) correction
can be mistaken for a heavy and rash reversal.
Problem 6. For traders, improvement in MA
results in consequences even worse. All theorists
and traders acknowledge that MA are being late.
However, methods in solving the given problem are
imperfect (so to say, "middle-of-the-road"). For
instance, instead of simple MA, the following
improved versions are submitted
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There are individuals who prefer to change simple
MA into exponential MA, etc. (they consider this
to be the means of optimization this index). J.
Murphy struck such "admirers" the heaviest blow.
In "Technical analysis of future markets" (Part
9), he quoted a certain statistics. These data
were initially submitted in the paper "Computers
will help you in the game at future markets" by
Hockhaimer in YB "Commodities", 1978. There the
analysis is given to effectiveness of different
??? (TA) in the forex winner software Review
period 1970-1976 at various future markets. The
conclusion is the following. The simple MA is the
most effective. Ch. Lebo and D. Lucas arrived at
the analogous conclusion. These authors admit
that there is a seeming (apparent) refinement of
weighted- and exponential MA. However, in
practice, every test observed or carried out by
them indicates decided superiority of simple MA
to all others from the viewpoint of gaining
profit. According to Ch. Lebo and D. Lucas, the
application of exponential MA, as a rule, results
in "jerking", too costly for traders.
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