Quote from: Goomboo on July 27, 2013, 08:31:56 PM

Greetings, and thank you for the comments and questions.

Quote from: S3052 on July 27, 2013, 06:13:21 PM

I do not think that the 10/21 moving average is a good trading indicator.

This really depends on your definition of the word "good". What do you mean by "good"?

Disciplined traders, who have systematically followed this method, have earned a 484% return in closed profits since the beginning of the year. Even at the highest level of Mt. Gox commission, they have earned a profit in every month except one this year.

Now is that "good"? I don't know. Good is a subjective word which implies a comparison. I'm sure we could spin the results whichever way desired through comparisons, but as I have stated throughout this thread, I believe that it is an effective and tested method of capturing profits when price trends.

Rather than me just stating my opinion, here is a backtest of the 10/21 crossover for the past 2 years on the daily timeframe, which is what I trade:

Now is this "good"? I still don't know - beauty is in the eye of the beholder. What is good for one certainly isn't good for all. For me, it is an effective and tested method of profiting which suits my nature.

Quote from: S3052 on July 27, 2013, 06:13:21 PM

most of the time it gave false signals or it too late to generate outstanding profits.

The vast majority of trading signals will be unprofitable. It really isn't about being right, it's about making money. Trades must be structured in such a way that the average winning trade is much larger than the average losing trade or you simply will not earn profit in the long run. A moving average crossover strategy allows you to have potentially unlimited profits while capping your loss size. This is crucial for successful trading.

There are trade-offs in every endeavor and with every method. Trend following, by nature, will result in many false and late signals. It's just the nature of the game but history has shown that by consistently playing it, profits can be earned.

It's essentially Pareto's Principle in action: 20% of your trades will account for 80% of your profits. It's your job to make sure that the 80% of weak trades do as little damage as possible.

Quote from: S3052 on July 27, 2013, 06:13:21 PM

have you backtested it seriously over the past 6, 12, 18 months?

This depends on your definition of "seriously". What do you mean by "seriously"?

Throughout this thread, I have stressed time and again that it is the duty of a trader to attempt to disprove his method. Why would you trust your hard-earned money to something which doesn't work? To directly answer your question: this method has been backtested across decades of trading data and found to be profitable in the majority of liquid asset classes. In fact, this method is used in most technical analysis textbooks in the chapters on automated and systematic trading precisely because it tends to work over the long run.

In my opinion, I have backtested the method seriously and I believe in the longevity of the results. But then again, what works for me may not work for you.

Thank you so much for taking the times to address all my questions. And indeed, you have tested it seriously.
Perhaps I was a bit misleading.

My point was more that there can be better entries and exits than the 10/21 automated method.
It is still a great method with the 10/21 mov. averages but there can be better ones.

The 10/21 method is up 2x versus buy and hold.
Our forecasting method from the newsletter is up much more...