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Chris,
Thanks for the additional work you have put into my original concept posted on
this site. It's flattering to be called Mr.Quinn. That phrase was usually
reserved for my dad. I prefer Terry, even though I am way over 16 years of
age.
As a side note to the 16 year old thread, the only legal contract in most
states that someone under age 18 can enter into is a Life Insurance contract.
Just shows how strong that Lobby is! So anyone under 16 trading anything is
either breaking and/or avoiding the law. The morality/rationality/ability
discussion most likely doesn't belong on Real traders anyway.
In regards to your post and comments on the x-bar concept:
A few points of clarity might be in order.
It is not the close that establishes the three point rule but the "my price"
plot which is the average of the open, high,low and close. This might change
some of your colored bars, and actually give you an earlier signal.
Here is another rule for you to consider. 8 "my price" plots above the center
moving average regardless if the are outside the upper band.
The mirror image would also identify a change in trend to the downside.
>From the rest of your post it is apparent there may be some confusion as to
the primary intent of the of the X-bar indicator, and I may have been the
cause of that confusion.
When I first posted the indicators I mentioned that they contained the
foundation to create a system- I did not mean to infer that it was a complete
system in itself.
The X-bar indicator group has the primary purpose to identify the Trend (Up,
Down, or Sideways) to keep us on the right side of the market. It, by itself
is not used to signal a trade entry. (Three consecutive plots outside the
upper band - buy the opening and Full Steam Ahead!!)
It is a trend indicator and trend indicators have 3 primary purposes.
Should I trade this Market?
Using What Strategy- Trending or Congestion?
Are you sure you want to take that countertrend trade and what evidence do you
have to support the notion of the going against the trend?
All this is indicator can say is "Trade this Market from the Long Side"
If the indicator suggests congestion, trade a congestion strategy.
If the statistical evidence says to be short the market then short it.
It has been my experience that using the same indicator to identify trend and
act as the set up for a trade usually don't work that well.
So when I pointed out indicator said to go long, the trade entry criteria was
not discussed, because it could and would differ based upon ensuing price
action. I use more than one set of rules to initiate a trade. (BTW This is
the typical weakness to most mechanical systems. Only one trade entry rule.)
Close out position rules would differ as well and as you pointed out, were not
discussed.
Trust this helps and does not make the waters any muddier.
All the best,
Terry
RE: Displaced Moving averages: I would never consider using DMA as a trend
indicator but they might have some limited use/benefit to initiate a trade.
Some elliott people use them to enter counter trend trades as part of a fifth
wave reversal strategy, but only in the 5th wave. Since I don't pretend to be
an elloitt expert that is about all I can say.
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