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SID'S Moving Average Trading System |
SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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Post: #1  Posted: Fri Sep 10, 2010 9:33 pm Post subject: SID'S Moving Average Trading System |
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I want to address a question commonly asked by investors and traders new to technical analysis and trading systems, "What is a good simple system to follow, to get in and out of markets?".
Most people are comfortable with the herd, market rumours, broker tips, etc. But by confirming your trading decision with the help of this trading system, you will be on the way to more profitable trading.
This simple and robust trading systems will not only identify trends, but will also provide you with entry and exit trading signals.
The Trading System
Remember the numbers 3 x 13 = 39
Simple daily moving averages of 3,13 and 39 can keep you in and out of markets fairly efficiently and profitably, (in any time frame actually). Here's how.
Some basic principles to understand are:
-The market moves in long (secular) trends.
-Intermediate trends can last for months to years.
-Short term trends can last for days to weeks.
-Trade intermediate trends in either direction.
-Trade short term trends only in the direction of the intermediate trend.
Proxies:
3 Day MA - a proxy for price
13 Day MA - a proxy for the short term trend (a moving trend line)
39 Day MA - a proxy for the intermediate trend (a moving trend line).
The Basics of MAs
MAs lag market reversals at tops and bottoms, the larger the MA the longer the lag period, the shorter the MA the shorter the lag but the more frequent the whipsaws. MAs work well when markets trend but get frequently whipsawed when they are in a range.
Therefore, trade trends with the MAs but do not trade ranges using MAs. Just stand aside and be patient until a new trend emerges.
The intermediate trend is in the direction of the 39 MA which acts like a moving trend line. If the 39 MA is pointing up then the intermediate trend is up, if down the trend is down. If the 39 MA is horizontal the market is in a range, from which a trend will, sooner or later, emerge.
Simple Trading Rules
1. When the 39 MA is moving up buy when the 3 MA crosses up over the 13 MA. and/or when the 3 MA crosses above the 39 MA.. When the 13 MA crosses above the 39 MA consider adding to your long position. Exit and stand aside when the 3 crosses back below the 13 MA..
2. When the 39 MA is moving down sell short when the 3 MA crosses below the 13 MA. and/or when the 3 MA crosses below the 39 MA.. When the 13 MA crosses below the 39 MA consider adding to your short position. Exit and stand aside when the 3 MA crosses back up over the 13 MA.
3. Only initiate trades in the opposite direction of the intermediate trend when the 3 MA crosses above or below the 39 MA, preferably after the 39 MA has already changed direction.
4. This 3:13 MA crossover will keep you trading in the trend with only a small lag and on the sidelines during corrections. The lag only becomes more substantial at reversals of the intermediate trend (a 3:39 crossover), a small price to pay at these uncertain times of trend transition.
You can set your technical analysis sofware to show bar charts with these 3X13x39 simple MAs. This trading system will help you select the best traders while avoiding the less profitable trades in choppy markets.
It should also work well with a 5 and 10 minute intra day chart!
As moving averages TRADING SYSTEMS are trending market indicators, i suggest my friends to use Adx indicator or Aroon up/down for signal confirmations to ignore the signals triggered in trading market or sideways market.... When the markets are sideways (non-trending) use a OB/OS oscillator trading system and not the system above...
SID  EID MUBARAK
Last edited by SID2060 on Wed Sep 15, 2010 5:08 am; edited 1 time in total |
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #2 Posted: Fri Sep 10, 2010 9:38 pm Post subject: |
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| PLZ USE EMA (EXPONENTIAL MOVING AVERAGES) IN PLACE OF SMA ( SIMPLE MOVING AVERAGE) FOR BETTER RESULTS...... SID
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Sanchit
White Belt
Joined: 03 Jul 2010
Posts: 46
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| Post: #3 Posted: Sat Sep 11, 2010 12:13 am Post subject: Re: SID'S Moving Average Trading System |
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| SID2060 wrote: | I want to address a question commonly asked by investors and traders new to technical analysis and trading systems, "What is a good simple system to follow, to get in and out of markets?".
Most people are comfortable with the herd, market rumours, broker tips, etc. But by confirming your trading decision with the help of this trading system, you will be on the way to more profitable trading.
This simple and robust trading systems will not only identify trends, but will also provide you with entry and exit trading signals.
The Trading System
Remember the numbers 3 x 13 = 39
Simple daily moving averages of 3,13 and 39 can keep you in and out of markets fairly efficiently and profitably, (in any time frame actually). Here's how.
Some basic principles to understand are:
-The market moves in long (secular) trends.
-Intermediate trends can last for months to years.
-Short term trends can last for days to weeks.
-Trade intermediate trends in either direction.
-Trade short term trends only in the direction of the intermediate trend.
Proxies:
3 Day MA - a proxy for price
13 Day MA - a proxy for the short term trend (a moving trend line)
39 Day MA - a proxy for the intermediate trend (a moving trend line).
The Basics of MAs
MAs lag market reversals at tops and bottoms, the larger the MA the longer the lag period, the shorter the MA the shorter the lag but the more frequent the whipsaws. MAs work well when markets trend but get frequently whipsawed when they are in a range.
Therefore, trade trends with the MAs but do not trade ranges using MAs. Just stand aside and be patient until a new trend emerges.
The intermediate trend is in the direction of the 39 MA which acts like a moving trend line. If the 39 MA is pointing up then the intermediate trend is up, if down the trend is down. If the 39 MA is horizontal the market is in a range, from which a trend will, sooner or later, emerge.
Simple Trading Rules
1. When the 39 MA is moving up buy when the 3 MA crosses up over the 13 MA. and/or when the 3 MA crosses above the 39 MA.. When the 13 MA crosses above the 39 MA consider adding to your long position. Exit and stand aside when the 3 crosses back below the 13 MA..
2. When the 39 MA is moving down sell short when the 3 MA crosses below the 13 MA. and/or when the 3 MA crosses below the 39 MA.. When the 13 MA crosses below the 39 MA consider adding to your short position. Exit and stand aside when the 3 MA crosses back up over the 13 MA.
3. Only initiate trades in the opposite direction of the intermediate trend when the 3 MA crosses above or below the 39 MA, preferably after the 39 MA has already changed direction.
4. This 3:13 MA crossover will keep you trading in the trend with only a small lag and on the sidelines during corrections. The lag only becomes more substantial at reversals of the intermediate trend (a 3:39 crossover), a small price to pay at these uncertain times of trend transition.
You can set your technical analysis sofware to show bar charts with these 3X13x39 simple MAs. This trading system will help you select the best traders while avoiding the less profitable trades in choppy markets.
It should also work well with a 5 and 10 minute intra day chart!
As moving averages TRADING SYSTEMS are trending market indicators, i suggest my friends to use Adx indicator or Aroon up/down for signal confirmations to ignore the signals triggered in trading market or sideways market.... When the markets are sideways (non-trending) use a OB/OS oscillator trading system and not the system above...
About the 3 13 39 trading system, you can try reducing the time period of the price bars. For example if you are using 30 minute bar chart, reduce it to 15 minutes. If you are using a 15 or 10 minute bar chart reduce it to 5 minutes.
This way you will get earlier signals. But beware, earlier signals will always come at the cost of more whipsaws.
SID EID MUBARAK |
Thnks Sid for the detailed explanation...
Could you kindly elaborate the 3rd point about intiating trades in the opposite direction? Also, please post some charts showing the strategy at work
Regards,
Sanchit
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #4 Posted: Sat Sep 11, 2010 12:29 pm Post subject: |
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iam a bit busy. I request senior members to plz backtest the strategy. Post charts and give feedback and valuable suggestions as its a vry simple working and profitable strategy.
Regards
Sid
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #5 Posted: Sat Sep 11, 2010 12:42 pm Post subject: |
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Dear sanchit
Thanks a lot for ur appreciation. Let me try to explain the 3rd point of initiating trades in opposite of intermediate trend.
Suppose ema 34 is pointing downside that means there is intermediate downtrend . In this case if ema 3 cross above ema 13, dont buy but wait. Only buy when ema 3 cross above ema 39. U can add to ur positions when ema 13 also cross above ema 39.
For shortselling.
Suppose ema 39 is pointing upside that is uptrend. In this case dnt short when ema 3 cross below ema 13 frm upside down but wait. Short nly when ema 3 cross below ema 39. U can short more if ema13 also crosd below ema 39... I hope u got it nw. SID
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Padkondu
White Belt
Joined: 23 Jan 2008
Posts: 120
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| Post: #6 Posted: Sun Sep 12, 2010 12:24 am Post subject: |
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| SID2060 wrote: | Dear sanchit
Thanks a lot for ur appreciation. Let me try to explain the 3rd point of initiating trades in opposite of intermediate trend.
Suppose ema 34 is pointing downside that means there is intermediate downtrend . In this case if ema 3 cross above ema 13, dont buy but wait. Only buy when ema 3 cross above ema 39. U can add to ur positions when ema 13 also cross above ema 39.
For shortselling.
Suppose ema 39 is pointing upside that is uptrend. In this case dnt short when ema 3 cross below ema 13 frm upside down but wait. Short nly when ema 3 cross below ema 39. U can short more if ema13 also crosd below ema 39... I hope u got it nw. SID |
Dear Sir,
the most difficult thing to learn is to be simple. It is true that moving averages are the simplest means of learning the trend, but they poorly perform as entry/exit signals. i suggest the following. identify trend using 13ema and 34sma combination, i use it on 60min chart as i intend to take only swing trade positions. the combination of the moving averages is dependent on the objective behind the trade/style of each individual trader.
long entry when 13ema is above 34 sma and sts(5,3,3) gives a buy signal below 40, use trailing stop methods such as ATR stop, swing low, or sma(13, low) as stop loss on closing basis.
short entry when 13ema is below 34 sma and sts(5,3,3) gives sell above 60. same trailing stop methods can be used. i post a chart for better understanding. less wipsaws in this system, but requires more patience to wait for the system to give u the desired trade.
the system you suggested is good for sure. but it required more interpretations, chances for wipsaws, as ema 3, 13 change so fast. please ignore if i am wrong. i am not pointing out about this system.
regards
KNRK Prasad
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #7 Posted: Sun Sep 12, 2010 11:23 am Post subject: |
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Dear padkondu/KNRK Prasad
u should use ema 5 and ema 13 combination or ema 5 and ema 20 combinations in time frame 60 min for better entry and exit levels.... Try these combos in ur tf and decide urself.
Regards
Sid
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acharyams
Yellow Belt
Joined: 04 Jul 2010
Posts: 552
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| Post: #8 Posted: Sun Sep 12, 2010 1:38 pm Post subject: Re: SID'S Moving Average Trading System |
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| SID2060 wrote: | I want to address a question commonly asked by investors and traders new to technical analysis and trading systems, "What is a good simple system to follow, to get in and out of markets?".
Most people are comfortable with the herd, market rumours, broker tips, etc. But by confirming your trading decision with the help of this trading system, you will be on the way to more profitable trading.
This simple and robust trading systems will not only identify trends, but will also provide you with entry and exit trading signals.
The Trading System
Remember the numbers 3 x 13 = 39
Simple daily moving averages of 3,13 and 39 can keep you in and out of markets fairly efficiently and profitably, (in any time frame actually). Here's how.
Some basic principles to understand are:
-The market moves in long (secular) trends.
-Intermediate trends can last for months to years.
-Short term trends can last for days to weeks.
-Trade intermediate trends in either direction.
-Trade short term trends only in the direction of the intermediate trend.
Proxies:
3 Day MA - a proxy for price
13 Day MA - a proxy for the short term trend (a moving trend line)
39 Day MA - a proxy for the intermediate trend (a moving trend line).
The Basics of MAs
MAs lag market reversals at tops and bottoms, the larger the MA the longer the lag period, the shorter the MA the shorter the lag but the more frequent the whipsaws. MAs work well when markets trend but get frequently whipsawed when they are in a range.
Therefore, trade trends with the MAs but do not trade ranges using MAs. Just stand aside and be patient until a new trend emerges.
The intermediate trend is in the direction of the 39 MA which acts like a moving trend line. If the 39 MA is pointing up then the intermediate trend is up, if down the trend is down. If the 39 MA is horizontal the market is in a range, from which a trend will, sooner or later, emerge.
Simple Trading Rules
1. When the 39 MA is moving up buy when the 3 MA crosses up over the 13 MA. and/or when the 3 MA crosses above the 39 MA.. When the 13 MA crosses above the 39 MA consider adding to your long position. Exit and stand aside when the 3 crosses back below the 13 MA..
2. When the 39 MA is moving down sell short when the 3 MA crosses below the 13 MA. and/or when the 3 MA crosses below the 39 MA.. When the 13 MA crosses below the 39 MA consider adding to your short position. Exit and stand aside when the 3 MA crosses back up over the 13 MA.
3. Only initiate trades in the opposite direction of the intermediate trend when the 3 MA crosses above or below the 39 MA, preferably after the 39 MA has already changed direction.
4. This 3:13 MA crossover will keep you trading in the trend with only a small lag and on the sidelines during corrections. The lag only becomes more substantial at reversals of the intermediate trend (a 3:39 crossover), a small price to pay at these uncertain times of trend transition.
You can set your technical analysis sofware to show bar charts with these 3X13x39 simple MAs. This trading system will help you select the best traders while avoiding the less profitable trades in choppy markets.
It should also work well with a 5 and 10 minute intra day chart!
As moving averages TRADING SYSTEMS are trending market indicators, i suggest my friends to use Adx indicator or Aroon up/down for signal confirmations to ignore the signals triggered in trading market or sideways market.... When the markets are sideways (non-trending) use a OB/OS oscillator trading system and not the system above...
About the 3 13 39 trading system, you can try reducing the time period of the price bars. For example if you are using 30 minute bar chart, reduce it to 15 minutes. If you are using a 15 or 10 minute bar chart reduce it to 5 minutes.
This way you will get earlier signals. But beware, earlier signals will always come at the cost of more whipsaws.
SID EID MUBARAK |
Please elaborate "Adx indicator or Aroon up/down for signal confirmations to ignore the signals triggered in trading market or sideways market.... When the markets are sideways (non-trending) use a OB/OS oscillator trading system and not the system above... "
Further, will the system work if one uses EOD candles and eod EMAs?
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #9 Posted: Sun Sep 12, 2010 5:10 pm Post subject: Re: SID'S Moving Average Trading System |
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HEY,
Plz visit: http://www.onlinetradingconcepts.com/TechnicalAnalysis/ADX.html
On this site u will get one of the best explanation of adx and other indicators, chart patterns, candlestick patterns explained with easy language and charts...Make a regular habit to visit the site mentioned and keep learning and trade profitably AND YES THE SYSTEM WORKS IN EOD ALSO....sid
Acharyams WROTE:
Please elaborate "Adx indicator or Aroon up/down for signal confirmations to ignore the signals triggered in trading market or sideways market.... When the markets are sideways (non-trending) use a OB/OS oscillator trading system and not the system above... "
Further, will the system work if one uses EOD candles and eod EMAs?[/quote]
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Padkondu
White Belt
Joined: 23 Jan 2008
Posts: 120
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| Post: #10 Posted: Sun Sep 12, 2010 5:29 pm Post subject: |
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| SID2060 wrote: | Dear padkondu/KNRK Prasad
u should use ema 5 and ema 13 combination or ema 5 and ema 20 combinations in time frame 60 min for better entry and exit levels.... Try these combos in ur tf and decide urself.
Regards
Sid |
thanks sid, i will try 5 ema and 13 sma combination for 60 min timeframe. further please suggest your openion on my set up for 60min+15min multiple timeframe technique, which i currently use for my trading. i use ema,sma combination(8ema+21sma or 13ema+34sma for stocks and 5ema+13sma for nifty), dmi/adx (13/7) in 60 min timeframe for deciding on trend and move to 15 min take entry on sts(8,3,5) signal and use ATR stop loss technique on 15 min chart for exit. further i study daily chart/weekly chart for support/resistance levels only, and only to stay away from selling at support/buying at resistance. nothing else. i also use rsi(5) on weekly chart as a filter. i mean, if rsi(5) on weekly chart is at ob level, i will not buy and if rsi(5) on weekly chart is at os level, i will not sell.
please give your suggestions to finetune the system.
further please sugges me the setup for daily/60min timeframe, since i want to switch to this timeframe owing to my constraints.
regards
padkondu
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smith06
White Belt
Joined: 05 May 2009
Posts: 12
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| Post: #11 Posted: Mon Sep 13, 2010 12:39 pm Post subject: |
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| Padkondu wrote: | | SID2060 wrote: | Dear padkondu/KNRK Prasad
u should use ema 5 and ema 13 combination or ema 5 and ema 20 combinations in time frame 60 min for better entry and exit levels.... Try these combos in ur tf and decide urself.
Regards
Sid |
thanks sid, i will try 5 ema and 13 sma combination for 60 min timeframe. further please suggest your openion on my set up for 60min+15min multiple timeframe technique, which i currently use for my trading. i use ema,sma combination(8ema+21sma or 13ema+34sma for stocks and 5ema+13sma for nifty), dmi/adx (13/7) in 60 min timeframe for deciding on trend and move to 15 min take entry on sts(8,3,5) signal and use ATR stop loss technique on 15 min chart for exit. further i study daily chart/weekly chart for support/resistance levels only, and only to stay away from selling at support/buying at resistance. nothing else. i also use rsi(5) on weekly chart as a filter. i mean, if rsi(5) on weekly chart is at ob level, i will not buy and if rsi(5) on weekly chart is at os level, i will not sell.
please give your suggestions to finetune the system.
further please sugges me the setup for daily/60min timeframe, since i want to switch to this timeframe owing to my constraints.
regards
padkondu |
Dear padkondu
Would you please elaborate your system with the help of an example. If
ncessary, you can open a separate thread.
Regards,
smith06
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #12 Posted: Mon Sep 13, 2010 1:38 pm Post subject: |
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Dear ST/PT
The cnx realty and cnx infra index charts are still not available on ur website. Plz make them available asap.
Regards,
Sid
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SwingTrader
Site Admin
Joined: 11 Aug 2006
Posts: 2903
Location: Hyderabad, India
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| Post: #13 Posted: Mon Sep 13, 2010 1:42 pm Post subject: |
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| SID2060 wrote: | Dear ST/PT
The cnx realty and cnx infra index charts are still not available on ur website. Plz make them available asap.
Regards,
Sid |
Try CNXREALTY & CNXINFRA in EOD charts. Historical data is not available at the moment, will be uploaded later.
In the future please post such questions in "Problems/Complaints" forum. We usually don't answer such questions elsewhere in the forum.
_________________
Srikanth Kurdukar
@SwingTrader |
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Padkondu
White Belt
Joined: 23 Jan 2008
Posts: 120
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| Post: #14 Posted: Mon Sep 13, 2010 11:48 pm Post subject: |
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| smith06 wrote: | | Padkondu wrote: | | SID2060 wrote: | Dear padkondu/KNRK Prasad
u should use ema 5 and ema 13 combination or ema 5 and ema 20 combinations in time frame 60 min for better entry and exit levels.... Try these combos in ur tf and decide urself.
Regards
Sid |
thanks sid, i will try 5 ema and 13 sma combination for 60 min timeframe. further please suggest your openion on my set up for 60min+15min multiple timeframe technique, which i currently use for my trading. i use ema,sma combination(8ema+21sma or 13ema+34sma for stocks and 5ema+13sma for nifty), dmi/adx (13/7) in 60 min timeframe for deciding on trend and move to 15 min take entry on sts(8,3,5) signal and use ATR stop loss technique on 15 min chart for exit. further i study daily chart/weekly chart for support/resistance levels only, and only to stay away from selling at support/buying at resistance. nothing else. i also use rsi(5) on weekly chart as a filter. i mean, if rsi(5) on weekly chart is at ob level, i will not buy and if rsi(5) on weekly chart is at os level, i will not sell.
please give your suggestions to finetune the system.
further please sugges me the setup for daily/60min timeframe, since i want to switch to this timeframe owing to my constraints.
regards
padkondu |
Dear padkondu
Would you please elaborate your system with the help of an example. If
ncessary, you can open a separate thread.
Regards,
smith06 |
Dear Smith06
it is already there in this post below pl go through. this system is meant for taking intermediate swings on 60 minute chart. hold position for a couple of days for 5-10% returns.
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SID2060
White Belt
Joined: 04 Nov 2009
Posts: 319
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| Post: #15 Posted: Wed Sep 15, 2010 1:45 am Post subject: |
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hey padkondu
Dnt get much confuse in time frames. Let me tell u some interesting/shocking things regarding time frames.
The ema combination of ema 107 and ema 200 in 5 min time frame is almost same as ema 50 and ema 107 in 10 min time frame. It means same exit and entry level in two different time frames. In the same way ema 13 and ema 45 of time frame 30 min is also equivalent to both 5 and 10 min time frame. Give it a try.
Regards
Sid
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