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Moving Averages: An In-Depth Guide
4 replies, 1148 viewings
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OmniTrader Professional Forum
OmniLanguage Discussion
Moving Averages: An In-Depth Guide
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Last Activity 10/5/2024 12:51 AM 4 replies, 1148 viewings |
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Frank Birch Veteran   Posts: 171 Joined: 3/25/2006 Location: UK  User Profile |
Moving Averages: An In-Depth Guide Within the landscape of technical analysis, myriad tools exist to assist traders in decoding market movements. The Moving Average, with its multifaceted forms and adaptations, emerges as a cornerstone tool. This document demystifies various moving average formulas, meticulously tailored for both long and short positions. Think Outside the Moving Average Box: Before diving deep into the formulas, it's pivotal to grasp a nuanced philosophy: not all moving averages are created equal. Depending on market behavior, traders might find one type of moving average more adept for bullish scenarios and another for bearish situations. For instance, in a steadily rising market, the simplicity and smoothness of the Simple Moving Average (SMA) could be more pertinent. Conversely, during more volatile downtrends, the agility of the Exponential Moving Average (EMA) might prove advantageous, given its quick responsiveness to price changes. In essence, be adaptive and understand the unique attributes of each moving average type and its optimal context of application. Parameter Specifications: To ensure clarity and consistency, each formula examined will be governed by a structured set of parameters: MIN: Denotes the minimum value for the period. MAX: Represents the maximum allowable value. Increment: Dictates the step-size or interval between sequential values. Default: Represents the frequently opted or standard setting. 1. Exponential Moving Average (EMA) Formula: Close > MovingAverageExponential(PeriodLong) Description: The EMA emphasizes recent prices, providing a responsive perspective of ongoing price trends. Implication for Long Formulas: A close above the EMA suggests an inclination towards an upward price trajectory, reflecting bullish momentum. The reverse is true for short positions: a close below the EMA may signal bearish tendencies. 2. Adaptive EMA with ATR (aEMA) Formula: Close > EMA(PeriodLong) AND Close < EMA(PeriodLong) + ATR(PeriodATRlong) Description: This formula embeds the Average True Range (ATR) – a tool designed to offer insights on potential price retractions within a prevailing trend. Implication for Long Formulas: The goal is to pinpoint instances where the price, while remaining above the EMA, does not surpass a volatility-driven ceiling. The counterpart is examined for short positions. 3. Percentage-Based EMA (pEMA) Formula: Close > EMA(PeriodLong) AND Close < EMA(PeriodLong) * (1 + PercentLong) Description: The pEMA method deploys a percentage to outline parameters around the EMA. Implication for Long Formulas: The aim here is to validate that the close, apart from overshadowing the EMA, also nests within a pre-fixed percentage boundary, indicating a bullish trend that's not too aggressive. The converse interpretation holds for short positions. 4. EMATR Confirmation Formula: Close[1] > EMA(PeriodLong) + ATR(PeriodATRlong) AND Close > EMA(PeriodLong) AND Close < EMA(PeriodLong) + ATR(PeriodATRlong) Description: This seeks to chronicle price actions over a duo of days, tracking a robust momentum on the initial day, succeeded by a retracement confirmation on the subsequent day. Implication for Long Formulas: The essence is to spotlight potent upward price thrusts that are later greeted with moderated pullbacks. The flip side is observed for short formations. Wrapping up, moving averages offer traders a refined apparatus to discern and navigate market trends. Mastery over these tools and their nuanced applications can amplify the precision of trading decisions manifold. It's paramount to root any formula's application in extensive backtesting and empirical research. In culmination, I've handpicked and curated this ensemble of my most esteemed moving average formulas. Through this assembly, termed the Momentum Confirmation Suite (MCS), I endeavor to shed light on their profundity and pivotal role in technical analysis. My ardent aspiration is that this exploration not only illuminates the intricacies but also galvanizes you to traverse the market landscapes with heightened clarity and acumen. Attachment Notice: Please find attached the Momentum Confirmation Suite (MCS) below for your convenience and further exploration. This suite encompasses the detailed formulas and methodologies as discussed, serving as a handy toolset for your trading endeavors. Please save this to your OmniTrader Strategies folder. This is a 1 block strategy for you to copy and paste into any strategy / and when closing the Momentum Confirmation Suite (MCS) strategy always click YES!!! Regards Frank Birch  Attached file : Momentum Confirmation Suite (MCS).ots (1300KB - 133 downloads) | ||
| Frank Birch Veteran Posts: 171 Joined: 3/25/2006 Location: UK User Profile |
I've updated the Momentum Confirmation Suite (MCS) strategy block with a notice on the pEMA formula regarding the percentage value. Also ive added the full write up into the description box in the flow chart for ease of use as well. Please find attached revised Strategy block. If you already have downloaded this just re download and over ride the previous version. Regards Frank Birch [Edited by Frank Birch on 9/12/2023 1:39 PM] Attached file : Momentum Confirmation Suite (MCS).ots (1300KB - 130 downloads) | ||
| Frank Birch Veteran Posts: 171 Joined: 3/25/2006 Location: UK User Profile |
Are You Ready for a Trading Revolution? Tired of navigating through the sea of false signals? Eager to add a groundbreaking tool to your trading arsenal? In just one week, we will unveil a pioneering formula that promises to redefine the way you approach the markets. This isn't just another tool; it's the culmination of exhaustive research, designed to work seamlessly with various moving averages, serving as your shield against misleading market cues. Whether you’re accustomed to the world of EMA, SMA, TMA, WMA, or ZMA, our upcoming revelation promises adaptability and precision. Imagine a trading environment where each of your signals undergoes an enhanced validation process. Think of the confidence you'll possess, knowing that an extra layer of verification backs every decision. The anticipation is real, and the potential is enormous. Stay on the edge of your seats, traders. As the days count down, prepare to witness a transformative addition to the trading landscape. Next week, all will be revealed. Get ready to elevate your trading game! Regards Frank Birch | ||
| Frank Birch Veteran Posts: 171 Joined: 3/25/2006 Location: UK User Profile |
Enjoy! In the world of trading, where precision and timeliness are paramount, a groundbreaking formula emerges, revolutionizing the realm of Exponential Moving Averages (EMA). This novel formula stands as a robust tool to enhance traders’ strategies, guiding both novice and experienced individuals in making informed trading decisions. The Revolutionary Long Position Formula: Consider this scenario: Closing Price Comparison - Ensure the closing price is above the designated EMA period for long positions, signifying an upward momentum. Close > EMA(Close, EMAPeriodLong) EMA Evaluation for Continued Momentum - Confirm the EMA's upward trajectory over a specific bar delta, reinforcing the continuous momentum. EMA(Close, EMAPeriodLong)[BarDeltaL] - EMA(Close, EMAPeriodLong) > 0 Price and Volatility Assessment - Make sure the price isn’t overly inflated, ensuring it is below the EMA plus a factor of the Average True Range (ATR). Close < EMA(EMAPeriodLong) + ATR(PeriodATRlong) This trio forms a powerhouse long position formula, ensuring traders operate within a framework of upward momentum and reasonable price limits. The Comprehensive Short Position Formula: Flip the narrative for short positions: Closing Price Assessment - Ensure the closing price is below the EMA for short positions, signifying a downward trajectory. Close < EMA(Close, EMAPeriodShort) Continuous EMA Evaluation - Confirm the EMA's downward trend over a specified bar delta. EMA(Close, EMAPeriodShort)[BarDeltaS] - EMA(Close, EMAPeriodShort) < 0 Price Evaluation with Volatility in Mind - Ensure the price is not deflated, staying above the EMA minus a factor of the ATR. Close > EMA(EMAPeriodShort) - ATR(PeriodATRshort) These components construct a formidable short position formula, assuring traders of operating within a zone of downward momentum and appropriate price boundaries. Unveiling the Magnitude: Why does this formula stand out? It’s a meticulous filter, a beacon, navigating traders through the turbulent waves of the market. It’s the lens, bringing clarity amidst market noise, ensuring each trading opportunity aligns with specific momentum and volatility criteria. Integration and Enhancement: Merge this formula with systems identifying higher lows or lower highs, enhancing signal quality and ensuring your decisions are informed and not reactions to market noise. Its adaptability to other moving averages like SMA, WMA, ZMA, and TMA extends its reach, providing traders with diverse tools tailored to their unique trading styles. Backtesting, Forward Testing, and Strategy Optimization: Prioritize extensive backtesting and forward testing to validate this formula’s efficiency within specific market contexts. Employ a Strategy Wizard for optimal parameter identification, refining your approach for maximum profitability. Beyond Numbers – A Visual Revolution: Imagine this formula transcending numerical boundaries, transforming into a visual indicator within platforms like OmniTrader. It’s not just numbers and comparisons; it’s a visual guide, a clear, intuitive representation of market movements, further simplifying your trading decisions. Conclusion: Embrace this pioneering formula as your trading companion, navigating you with precision, insight, and reliability through the multifaceted world of trading. It’s not just another tool; it’s a comprehensive, adaptable ally in your trading journey, ensuring each step you take is grounded in robust analysis and informed decision-making. So, ready to embark on a transformative trading journey? This formula is your compass, guiding you through each trading decision, ensuring each move you make is not just a guess, but a calculated, informed choice leading you to trading success. Elevate your trading experience, ensuring that every trade is a step towards profitability and trading excellence. The future of trading is here, and it’s more exciting than ever! I hope you have enjoyed this journey on improving on such a spectacular underrated indicator, and I hope you enjoy my work. May this formula be a beacon of light guiding your trading path to continuous success and growth. The adventure in the world of trading is endless, and with this formula, you’re not just surviving the waves; you’re conquering them, one successful trade at a time. Regards Frank Birch Attached file : MA Suite (MAS).ots (820KB - 127 downloads) | ||
| Frank Birch Veteran Posts: 171 Joined: 3/25/2006 Location: UK User Profile |
who would of thought you can create the perfect moving average indicator that uses a whole new methodology to be current with price and not lag?? The system isn't built yet but its clear from the charts just BUY on low on touch for longs and Sell on High of touch of lines (obviously above the median line for longs and below for shorts) Maps every trading scenario and updated to current price look and the contraction and expansion this opened my eyes. this is better than Guppy i know. Regards Frank Birch [Edited by Frank Birch on 11/22/2023 2:37 PM] Attached file : 6A.png (399KB - 210 downloads) Attached file : 6E.png (408KB - 211 downloads) Attached file : 6J.png (423KB - 197 downloads) |
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