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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: David R. Evans who wrote (7796)	1/15/1998 11:35:00 PM
From: Terry Mitchell	Read Replies (2) \| Respond to of 12039

Another good post Dave, at least for me. I notice you are using Dahl with simple moving average in the formula which is the standard in WOW. I saw someone list a Dahl formula using exponential. It appears the exponential form typically crosses the zero line sooner. I normally use exponential MA's but did not know if you or others here considered it an acceptable form of Dahl. Terry

To: David R. Evans who wrote (7796)	1/16/1998 4:23:00 AM
From: shasta23	Read Replies (2) \| Respond to of 12039

HI DAVE! Thanks for all the good work for all of us. After your post i'm looking more into systemtesting and start to see some points in the whole process i never realized: e.g. open drawdown and when i see that 35% drawdown i know i could never trade according to this tested method even if it statistically would work out. But i actually wanted to talk about a small observation i made with IBM.I followed the post you wrote to Terry and started to look the first time into these longer term indicators like DAHL and MACD(13,34,89) and actually liked what i saw there. I had disregarded them before and looked more at shorter term indicator. So that was intersting. I was surprised how small the open drawdown was for MACD(13,34,89)...less $1000...i liked that. Quiet a few of the classical systems(DAHL, MACD(13,34,89), Stochrsi(14)...) worked well with IBM creating returns in the 110-130% region over a timeperiod since 1992. But i noticed that IBM was most of the time in a bullrun with some ups and downs. I then went ahead and loaded only the last 6 month in which IBM is in a trading range between 95 and 115. For some longer term indicators that wasn't enough time but it sure demonstrated that most system were not able to make a positive return during this time period. It showed me the importance of a clear trend to provide good results. But i also think that if you traded without indicators e.g.bounce play from the $95 support you could have still make some money.Another possibility during this time period could've been to trade crossovers of MA's like 5EMA and 9EMA. This is more an observation than a question. Only question remains...any comments? Stefan

To: David R. Evans who wrote (7796)	1/16/1998 12:23:00 PM
From: Loren	Read Replies (3) \| Respond to of 12039

David - <<<< One other thing to look at on this chart. Just the fact that Dahl or MACD (13-34-89) are long does not guarantee price is moving in the right direction. Example: On 12/2/96 both Dahl and MACD (13-34-89) were long and price closed at $81.50. Any systems that asked these two indicators for confirmation would have been told YES! Ten bars later, IBM closed at $74.31 so any short term one to two weeks systems would have lost money. On 1/21/97 Dahl was long and IBM closed at $84. It then proceeded to go down to $73.18 on 2/14/87. <<<< Well, you're right, but I hope you were preaching to the choir. The buy signals that occurred before that date on 12/2/96 happened either several days before, or several weeks before, depending on whether you were using the MACD or Dahl indicators. Either way, I'm hoping people out there realize that it is very dangerous to enter a trade very long after the initial buy signal is given. Entering too late turns some great trades into marginal trades, and some marginal trades into small losses (assuming you also employ stop-loss rules). It will drastically lower your '% winning' record, and when that happens, you're screwed. Remember a few days ago when I said I had critiqued all my trades one year, and found I was buying too late? This is exactly what was happening. When you give up the "first $5" on what later turns out to be a $4.50 trade for those who bought at the buy signal, you net out at a loss of $.50!! These days, if I happen on a stock that gave a buy signal several days or weeks ago, it doesn't matter if the indicators are shooting skyward. I pass on the trade, and look for a fresh signal!:-) Loren