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Here I attempt to reveal the source of such a higher level of failures and losers (19 of 20 traders!). The losses are the result of a notably simplified way of the utilization of this so crucial complex catalog by "classicists" of Forex. The analogous see on MA list is natural in the up-to-date analysts as well. Further, traders do the same. However, for the latter misunderstanding of the diagnostic way of MA effects in deficits of real cash at Forex.Take a go through the graphs published by J. Murphy in his guide "The specialized examination of future markets" (Part 9). There plots are carry on "migrating" from one manual of Forex to another.
Information 14.1. There is a typical example of mixture of the 10-days easy MA (SMA) with the 40-days one. The audience must give consideration how correctly the inclination in price movement is recurring by the small 10-days MA. The 40-days MA is behind of the cost motion fairly farther. MA value evens up (levels) the spread of prices. At the same time, these MA are usually continue being behind from the marketplace dynamics in time. The 10-days MA is selected as the strong point; the 40-days MA is shown in the shape of the dotted line. (For view photograph see records in end of article)
Chart14.2. There's a typical example of the 20-days simple MA. Traders respect intersections of MA shapes by prices as signs for opening the corresponding positions. In the time that fits to the information proper line, the price indices are below the MA curve. This indicates that industry are at the stage in decrease.One should focus on these fact. The 20-days M A curve evens up the price dynamics. The same, that 20-days MA contour is maintaining behind from industry makeup in time. Krista Glover
In accordance with these pictures, every thing is clear - isn't it? That's, at a certain place one should stake on "sell", at still another place one must stake on "get", etc. Probably, looking only at that graph, any starter can believe his account could be doubled after several days of the job at Forex. Nevertheless, actually, just 1 of 20 traders does earn his money. At the same time, all traders (19 losers included) utilize MA catalog in that or that kind throughout their work at Forex.
This process, when used in the daily trading in Masterforex-V Trading Academy, gives causes to uncertainty the correctness of the claims made by Ch. Lebo and D. Lucas. Inside their guide "The computer analysis of future markets", the experts state that MA indices generally show the tendency direction. But, with MA one cannot estimate the trend energy (the heaviness or weakness with this trend). It is particularly crucial if one estimates the development energy with the help of MA indices, taken from other methods of Forex complex analysis.Problem #4. MA list drawbacks use effect on different complex signals, based to them (MA). Therefore, such signal may deceive a trader throughout trades even a lot more than MA does it.
For instance, you can find MACD (Moving Normal Convergence/Divergence ), Alligator, Amazing Oscillator, CCI (Commodity Station Index), Going Normal Backgrounds, Going Average of Oscillator, Bollinger Artists, Stochastic Oscillator, etc. All such indices derive from MA. When developing such indices, the authors issued from MA. Further each of them included to this schedule what he liked. It could be the rate of modify in the price, the trading size, the shutting value value with respect to the prior data, etc. Who has added what things to MA does not make a secret. One can understand it, as an example, from MetaTrader application engineers from MetaQuotes Computer software Corp.
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