HiLowEMA (8) (8) & EMA (5,-2)

TA20

Hi

I saw " HiLowEMA (8) (8) & EMA (5,-2) " posted as comment to " Bear Market Update: A Sobering Message From Italy, PLUS Technical Analysis Is Alive And Well " by Dave Landry here on stockcharts.com. Can anyone explain how to set it up to use it ? Thanks.

lmkwin

Select the EMA overlay
In the parameter put 8,h for the 8 period EMA of the High

8,l for the Low

the EMA 5,-2 will display a 5 period EMA displaced 2 periods to the left. If it were a positive number after the comma, it would shift the EMA line that number of periods to the right.

TA20

Thanks for the explanation.

However, what does this accomplish trade-wise ? Thanks as this is new to me.

lmkwin

Somebody put a comment on a blog post. They would be your best source for that information.

Vic B • 23 days ago
Critic: "Technical analysis doesn't work in this environment."
Your WRONG, you just have crappy tools.
Try: HiLowEMA (8) (8) & EMA (5,-2)
Check all time frames
Vic B

−

Andrew 18 days ago
Hi Vic

Can you explain how HiLowEMA (8) (8) & EMA (5,-2) works ? Thanks.

TA20

However, not sure if Vic B saw the comment. But there is no follow up from him yet. Not sure how to seek his attention.

lmkwin

I'd guess that it is a crossover technique. If the 5 is above the 8 H then look Long, if the 5 is below the 8 L think short.

Just a guess but, most crossover techniques offer a good risk profile. Rewards are something you would have to quantify through study.

Many of the current Bloggers on the StockCharts website use some sort of trend following mechanism.

TA20

Yes, that is what I was thinking along the line. But I add another signal: Long when 5 is above 8 H AND price is above 8 H. This might lag but avoid some whipsaw ?

If you don't mind, do you have some favorite trend following system that you try before ? Thanks very much for all your input so far.

lmkwin

It appears you are reviewing Landry's blog. I think you can't go wrong following Landry's advise. As you know, investing is about not doing wrong as much as you can. It's the handling of mistakes and learning from them that makes playing the game much more rewarding.

Larry Williams is also great to learn from. In essence all trend following is pretty much the same. It's all in identifying the turns.

Arthur Hill did tremendous work on StockCharts in system development and posted a lot of backtested results and tweaks to a lot of testing on systems. You can go to the StockCharts Search function and type in Arthur Hill backtest A lot of articles should come up



I use Point and Figure Charts. There is an inherent trend following mechanism built into those charts. It's called the reversal. A 3 box reversal PnF chart has a strong continuation bias. So a chart column is your short term trend. The tops and bottoms of the last 3-5 columns should provide an insight into your intermediate trend. etc.

There are so many systems but the best one you should "try" is the one that speaks to you. The one that, when it speaks to you, that you can listen to and understand what it's saying. The one that you can understand, and then follow the rules as to what you can or should do.

You don't want to look at systems that you either don't understand, or worse, ignore.

markd

It seems to me, anything works in a trending market, and nothing works if the market is not trending.

Of course, what matters is identifying the trend in your time frame. The longer your time frame, the more you have to allow your position to move against you (in dollar terms), and the more you give up waiting for the entry and the exit. On the other hand, the shorter the trend, the more time you have to invest watching your trades and the more you are likely to lose on slippage (normal bid ask and fast moving markets). On the other hand, commissions aren't the problem they once were, which makes the shorter time frame more appealing. But taxes maybe higher (depending on your bracket).

So really, its a matter of temperament. If you need or like action and quick results (either way!) trade shorter. If you are patient and have other things to do, trade longer term.

TA20

Thanks, lmkwin and markd. I will go back and review and post further questions. Thanks for your input..