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COMMENTS IMBEDDED
<< This is another case of using indicators blindly and back testing to make
them
fit. An understanding of what these indicators where meant to do and how
they
were intended to work would solve this problem. Both the moving average and
MACD are trend following systems and are lagging indicators.
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Actually MACD is NOT necessarily a lagging indicator. It may at times be a
leading indicator in terms of its signals, and often the lead is wrong to
boot. Macd parameter defaults on standard software are the results of the
work and optimization done by Gerald Appel 15 years ago. Certainly nothing
wrong with a little re-optimization.
============================================
They tell what the
condition was x numbers of bars back. Not what is happening now. The
assumption
is that if the trend changed x number of bars back then we are still in that
trend. The problem is, which trend are you in? Each time frame has a
different
trend. First you have to decide which time frame you want to trade. Second
you
have to decide which cycle in that time frame you are trading, and only then
can
you adjust the indicators to reflect the correct information. The first clue
is
that you only use odd numbers for moving averages and things dependent upon
averages. Ira >>
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If you do decide to re-optimize what you will likely find is that there are
no magic numbers whehther they be odd or even. The market does not know what
lengths your moving averages are. Continual re-optimization of systems though
should not effect the performance of most systems over the long haul, as the
parameter sets that work need be pretty robust (ie the system should work to
varying degrees over a broad parameter set) if the system is to work at all
over the long run. Not that the effort is probably not worthwhile for it owns
sake, but you will likely not find much that really significantly changes the
results of what you started with. If you do, then you are likely on to
something, and should probably continue down that path exhaustively.
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