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Author Topic: Trading with SMA crosses only, with 1 day chart: infallible ?  (Read 674 times)
jaffsde
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April 04, 2017, 07:28:40 PM
 #1

I was thinking about this strategy:

Only use the 1 day chart
Put 2 SMA of 10 and 20 hours
When they cross in an uptrend, buy
Sell when it cross again

As it is on a 1 day chart, SMAs shouldn't get faked by consolidation periods
The entry and exit points may not be the best, but gains seem assured

It seem too easy to really work
How could this fail ?
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April 04, 2017, 09:19:43 PM
 #2

I was thinking about this strategy:

Only use the 1 day chart
Put 2 SMA of 10 and 20 hours
When they cross in an uptrend, buy
Sell when it cross again

As it is on a 1 day chart, SMAs shouldn't get faked by consolidation periods
The entry and exit points may not be the best, but gains seem assured

It seem too easy to really work
How could this fail ?

SMA are easy to use and gave a lot of good signals. Also i suggest you to read something called Delphic Phenomenom

Make money on Financial Market, Forex & CFD.  Profits up 100% weekly!!! PM me for details
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April 06, 2017, 07:06:39 AM
 #3

I was thinking about this strategy:

Only use the 1 day chart
Put 2 SMA of 10 and 20 hours
When they cross in an uptrend, buy
Sell when it cross again

As it is on a 1 day chart, SMAs shouldn't get faked by consolidation periods
The entry and exit points may not be the best, but gains seem assured

It seem too easy to really work
How could this fail ?

SMA are easy to use and gave a lot of good signals. Also i suggest you to read something called Delphic Phenomenom
I will try to demo trade it and see if it would work on daily chart as sma has proofs to fail in a small time flame. I do focus my analysis on those things that move bitcoin and assets price intent of some laging indicators. Remember to put your stop lost when place a trade.


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Serpens66
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April 06, 2017, 03:58:30 PM
 #4

I was thinking about this strategy:

Only use the 1 day chart
Put 2 SMA of 10 and 20 hours
When they cross in an uptrend, buy
Sell when it cross again

As it is on a 1 day chart, SMAs shouldn't get faked by consolidation periods
The entry and exit points may not be the best, but gains seem assured

It seem too easy to really work
How could this fail ?
Are you sure you ment "10 and 20 hours" ? This makes not much sense when viewing  a 1 day chart (-> 1 candle = 1 day)
I guess you meant 10 and 20 period sma.

I backtestet this for you for Bitstamp USD in 2014 and 2016. Always buying 8 BTC when going long (with "backtrader" for python):
2014 Start 10.000 USD,  End 8969 USD:  
https://www2.pic-upload.de/img/32963507/dailysmacross2014.png
2016 Start 10.000 USD,  End 13.791 USD:
https://www2.pic-upload.de/img/32963509/dailysmacross2016.png

To sum it up:
Many strategies look very good in an uptrend (like 2016). But there are only versy few good strategies for a downtrend (2014).

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April 06, 2017, 09:18:16 PM
 #5

Thanks you for these back testings
Yeah I meant 10 and 20 days, not hours

On the 2014 chart: the first trade is a long which get closed very fast, but the 10SMA was going under the 20SMA, and the price went below the SMAs: for me the thing to do was clearly a short
And around 2014-04 there was a pretty good short to do but it look like it have been ignored ?

Indeed it seem better for strong trends, and loses like on 2014-05 seem possibly small compared to gains
Maybe adding another indicator to confirm the strength of the trend would help


Idrisu thanks for the stop-loss reminder
I only read a lot about trading look at the charts everyday and imagine how I could play with it
What I'd like to do is to throw some money at a good entry and to need to check the chart only once a day
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April 06, 2017, 10:07:49 PM
 #6

Thanks you for these back testings
Yeah I meant 10 and 20 days, not hours

On the 2014 chart: the first trade is a long which get closed very fast, but the 10SMA was going under the 20SMA, and the price went below the SMAs: for me the thing to do was clearly a short
And around 2014-04 there was a pretty good short to do but it look like it have been ignored ?

Indeed it seem better for strong trends, and loses like on 2014-05 seem possibly small compared to gains
Maybe adding another indicator to confirm the strength of the trend would help


Idrisu thanks for the stop-loss reminder
I only read a lot about trading look at the charts everyday and imagine how I could play with it
What I'd like to do is to throw some money at a good entry and to need to check the chart only once a day

Between 2014-03 and 2014-04 was a sell, or what do you mean?.

I guess a major problem with this crossing strategy is also, that you only have 2 signals (uptrend/downtrend).
But maybe 3 signals would be better: uptrend, downtrend and "not clear".
The backtest I made can not sell, if he did not bought btc previously, so there is no real "short". (I could sell all balance and additionally go real short, but I dont think this is a good idea at every crossing)
With three signals it would buy in uptrends. Sell to balance of 0 if it is unclear. And short (=negative balance) in downtrends.
I think with this kind of shorting you could also make profits in a big downtrend like 2014.

But what indicator should we use?

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April 07, 2017, 06:54:14 PM
 #7

Yes I meant a sell

Which indicator should we use, I don't know, I'm playing with volume-adjusted moving average right now, it seem really interesting as it combine the interpretation of SMA and volume, which can help to evaluate the momentum
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April 08, 2017, 12:49:38 AM
 #8

I was thinking about this strategy:

Only use the 1 day chart
Put 2 SMA of 10 and 20 hours
When they cross in an uptrend, buy
Sell when it cross again

As it is on a 1 day chart, SMAs shouldn't get faked by consolidation periods
The entry and exit points may not be the best, but gains seem assured

It seem too easy to really work
How could this fail ?

thats good strategy my friend,, and the simple trading rule is keep it simple
so we can predict the market easily,,

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April 08, 2017, 02:01:21 AM
 #9

Any strategy is a good strategy until the day it stops working. Any amateur trader is a genius until the day he or she stops "winning". Trading Bitcoin is very easy if it is going up but what of the times if it is going down? Your whole strategy should be able to "win" in up or down markets.

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April 12, 2017, 07:39:08 PM
 #10

Any strategy is a good strategy until the day it stops working. Any amateur trader is a genius until the day he or she stops "winning". Trading Bitcoin is very easy if it is going up but what of the times if it is going down? Your whole strategy should be able to "win" in up or down markets.

yeah,, trading is not only about strategy, but money management and psychology is more important,,
every strategy must have 2nd scenario , when the predicition is go to wrong direction..,
 Smiley

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April 12, 2017, 09:31:59 PM
 #11

on 1D chart is easier to see momentum , and on uptrend market every indicator is a winner.
SMA periods 10 21 is very basic but it gives very strong signal , people tend to ignore the cons of individual's indicator ,
it is highly recommended you know the good and bad of each indicator and make yourself a suite of indicators you feel comfortable with which will also cover each others cons , as and example SMA wont work well in downtrend or sideways because it is lagging.
there are faster indicators (usually they give more false positive) so you see every indicator has his strengths and weaknesses , learn them.
there is no one perfect and that is why you should combine indicators.
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April 13, 2017, 06:47:20 AM
 #12

Thank you for this daily strategy I will back-test it and analyses the profitable set-up I think  the daily time frame is better in trading   and I will demo test this strategy untill I am profitable.

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April 14, 2017, 01:01:18 PM
 #13

Any strategy is a good strategy until the day it stops working. Any amateur trader is a genius until the day he or she stops "winning". Trading Bitcoin is very easy if it is going up but what of the times if it is going down? Your whole strategy should be able to "win" in up or down markets.
The market is influenced by myriad of factors and it is not possible to factor all that into any one trading strategy. That explains the reason strategies often give wrong signals, but that is not the same as saying they stopped working. They still work and savvy traders have come to make their trading decisions based on the information they got from the combination of a number of indicators instead of just one.

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timerland
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April 14, 2017, 02:24:51 PM
 #14

SMA should never be considered as something that may give you up a market enter signal, but as something which may support the conclusion to enter/not enter the asset.
I usually do trading on daily chart, but i use just one SMA, it fits me enough and it sometimes can make me decline going in to the specified position, because it's behaviour give me off a strong signal to not buy/sell the financial instrument.

In my opinion, every strategy that is set up on indicators, is not a real strategy- I have tried it many times and i've been looking for techniques like that but in this case it just doesnt work.
You should analyze the price and make up deductions, but only be supported by different kinds of indicators- never put up money on them, because this is exactly what you do while buying bitcoin because two SMA has crosses.

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