Much gratitude and respect Sir Goomboo.
I notice on the first red arrow, the 10/21 didn't actually cross-over, but just met together for a moment. In retrospect, it was the time to sell. So I guess this means the lines don't strictly need to
cross-over, but a
coming-together can be enough to initiate a sell.
Now look, again (right now as I type this), the 10/21 have met... lets see if the strategy plays out.
Also Goomboo, the question which is probably on the tip of a few tongues right now. Pure skepticism -- I'd like to ignore it, but curiosity has the better of me. Although you instructed people not to use your 10/21 forumla, its almost impossible to expect anyone would
not use it (
Diffusion of responsibilty). If someone (such as youself) had a hunch that a bunch of people would be working explcitly with the 10/21 system, is there a way that you could use a counter-measure to make extra profits from this manipulation of the trend?
(this question is asked with much respect by the way).
Hi Bebop and thank you for the kind words,
If you look closely at your chart, you will see that a buy was generated before that sell...it was brief and you lost money on it, but you should have bought and then sold short.
I COULD be buying from all the people who are selling and selling to all the people who are buying. But frankly, that's too much effort and more risk than I'm willing to take for two reasons:
1. I don't bet against the trend and the moving averages determine intermediate trend for me
2. Let's say I were to try and absorb everyone's volume. What if I don't have enough money? 10k bitcoin sell into the market and I can only buy 9k. Now I'm in a 9k position and prices are going against me. I would have to "puke out" and sell all of my bitcoin to protect my money, further profiting those who are following the trend.
About the 10/21 combo - there's nothing special about it. It's just two moving averages. You can use the 9/14, the 12/26, the 21/50...basically whatever you're comfortable with. The idea here isn't a strict "you must use this!", but rather a concept to help people be objective about prices.
I've decided to go ahead and test this strategy across other data to demonstrate why I wouldn't trade against it. I believe that in order to act successfully in the financial markets, you must backtest your edge and verify that it holds up in the past. I have backtested the 10/21 moving average crossover in NinjaTrader to demonstrate its usefulness.
Here is a chart showing the entries and exits as we have discussed previously in this thread. I just noticed that I backtested simple moving averages, but frankly there is very little difference in the two:
Below is a chart showing the equity curve in percentage gain/loss basis across the past 10 years using a simple moving average crossover system on daily candles in the EUR/USD:
Now here's a page of the statistics on how frequently it was profitable, etc. There are several things to note here. The first is that profit is only "$.71". This strategy only trades $1 per trade (we're just testing entry / exit efficiency, not any sort of risk management). This means that over 10 years you made 7,100 pips...how much money you actually made depends on how many lots you traded. Next, look at the win percentage. On average, you would have won 41% of your trades. This means that every time you took a trade, you more than likely would lose. Think about that for a minute. In order to be successful in this business it isn't about how many times you win / lose, but how you handle those gains and losses. This is an important realization for all of you who decide to trade the 10/21 strategy - if you have a trade on right now, you more than likely will lose money on it, but if you stick with it, in the long run you will probably be profitable.
Do you set some positions to liquidate or something else?
)
