Tag: Moving Average Trading Strategy

Tag: Moving Average Trading Strategy

Is the Weighted Moving Average better than the Simple or Exponential Moving Average in Trading? What is the Weighted Moving Average Trading Strategy, and can we really make money with it? Well, why don’t we understand the WMA and the strategy based around it, and in the next video, I’m going to test the Weighted Moving Average 100 times to find its win rate. This is what the Weighted Moving Average looks like. If you plot the WMA on its own, you probably won’t see anything different from other moving averages out there. But if you plot the Weighted Moving Average with the Exponential and Simple Moving Average, you will notice something.

The WMA is used to find the direction of the trend so traders can look for buying or selling opportunities in the direction of the trend. The Weighted Moving Average gives more importance to the latest data than the past data. The exponential moving average also gives more importance to the latest data, but the exponential and Weighted Moving Averages are calculated differently and will show different values on a chart. If you have watched the Exponential and Simple Moving Average videos on the Trading Rush Channel, you already know that the Exponential Moving average is faster than the Simple Moving Average. But as you can see on this chart, the Weighted Moving Average is even faster than the Exponential Moving Average in some cases. It will stick close to the candles and will show the potential trend reversal faster than the other two moving averages.

If the Weighted Moving average reacts to price quickly, does this mean it will give faster and better entry signals than the Exponential and Simple Moving averages? Well, that depends on what kind of strategy we create with the Weighted Moving Average.

Since this is a moving average, many traders will look for buying opportunities when the price is above the Moving Average because it can indicate an uptrend. And if the price is below the moving average it can indicate a downtrend, and many traders will look for opportunities to go short.

This is a 200 period weighted moving average, and some traders will immediately buy or close their short position when the price crosses above the 200 WMA. And traders will create a new short position or will close their long position when the price crosses below the 200 Weighted Moving Average.

This strategy can be good for long-term investors, but we need something better.

We know that the Weighted Moving Average is faster than the simple moving average, and most of you know that there is a widely used moving average strategy called the Golden Cross Trading Strategy. We even tested the Golden Cross Strategy 100 times on the Trading Rush Channel to find its win rate. The win rate we got after 100 trades was profitable. Check out the Golden Cross Video to learn more.

In that Golden Cross Video, we used the simple moving average. But instead of using a simple moving average, what will happen if we use the weighted moving average which is much faster. Will we get better entry signals? Well, we will find that out in the next video when we take 100 trades with it.

Here’s how the Weighted Moving Average Strategy goes.

When the 50 period Weighted Moving Average, crosses above the 200 period weighted moving average, it’s a buy signal.

Similarly, when the 50 period WMA crosses below the 200 period WMA, it’s a sell signal.

In the buy setup, set the stoploss below the 200 period weighted moving average.

And in the short setup, set the stoploss above the 200 period WMA.

Here, you can see that the 50 WMA crossed above the 200 WMA, so entry is when the crossover happened, and stoploss goes below the 200 WMA.

In this short setup, the 50 WMA crossed below the 200 WMA, so entry is when the Crossover Happened, and set the stoploss above the 200 WMA.

Now watch this.

This is a long Golden Crossover with the 50 and 200 simple moving averages. As you can see, the entry signal with the simple moving average is right here.

But if we use the Weighted Moving Averages instead of simple moving averages, you will notice that the entry signal with the WMA is much earlier.

Here’s a short Golden Cross Setup with the simple moving averages. The simple moving averages gave a golden cross right here.

But on the other hand, the Golden Cross with the WMA was at a much better price.

But does this mean the weighted moving average is better in the long run? Well, in the next video, we are going to test the Weighted Moving Average Golden Cross Trading Strategy 100 times, to find its win rate, and to see if the Weighted Moving Average can improve the win rate of the Golden Cross Strategy.

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I took 100 Trades with FASTEST Moving Average Trading Strategy and this happened… HMA Strategy

Post author By Trading Rush
Post date March 1, 2021

hull moving average trading strategy

Tag: Moving Average Trading Strategy

Is the Hull moving average better than a normal moving average? What will be the win rate of the hull moving average trading strategy? In this video I took 100 trades with the Hull moving average Trading Strategy, and here’s what happened. If you have been trading even for a little while, chances are you have probably heard about the simple moving average and the exponential moving average. And if you are a subscriber of the Trading Rush Channel, you already know the win rate of the Moving Average Trading Strategy. On the Trading Rush Channel, we tested both, Simple moving average, and exponential moving average 100 times, and both of them had a profitable win rate. The Hull Moving Average is not exactly like the moving average that most traders are used to. So will it make more money than the other moving average trading strategy? Let’s find out. If you still don’t know about the profitable and simple moving average strategy that actually made money, check out the EMA and SMA moving average strategy videos on the Trading Rush Channel.

This is a 100-period simple moving average, and this is a 100-period exponential moving average. Now we know that the exponential moving average is different from the simple moving average because it gives more importance to the latest candles. But visually they are not that different from each other. The simple and exponential moving average are staying close to each other. But, if you add the same 100 period Hull moving average, even your dog can tell that the hull moving average is calculating the average in a different way and is showing a different value on the chart.

The Hull Moving Average was created by Alan Hull, and its main focus was to smooth out the moving average and reduce the lag. And that’s exactly what the Hull moving average does. On a trending chart, if you plot a 100 period SMA, EMA, and the Hull Moving average at the same time, you will notice that the 100 period Hull moving average will stay very close to the candles, while the Simple and Exponential will stay far away.

The Hull Moving Average is a moving average so people are going to use it to find the direction of the trend. But the creator of the HMA indicator Alan Hull does not recommend using the Hull as a crossover trading strategy. In other words, it is not recommended to use the Hull Moving Average to generate crossover signals. Which makes sense, because the whole point of making the HMA was to reduce the lag and show the change in direction quickly as possible.

In an uptrend, traders look for buying opportunities when the Hull moving average starts to rise up, and when the HMA is falling, traders look for short opportunities. Now let’s be honest, you are not going to take trades only based on a moving average. If you can trade only with a moving average, you can probably trade without using a moving average like Hull. Because if you look closely, you will notice that all Hull Moving Average is doing is sticking close to the price. And if you remove the Hull Moving Average, you can still easily tell where the price is going.

But what many of you wanted to find out was, if the Hull Moving Average was Better than the Simple and Exponential Moving Average Trading Strategies, and what will happen if we break the rules and use it as a crossover strategy. What will be the win rate of the Hull Moving Average Strategy?

The Hull Moving Average Crossover Trading strategy is easy to understand and goes like this. When the 100 period Hull moving average crosses above the 200-period simple moving average, it’s a buy signal. In the long setup, the stop loss goes below the 200 simple moving average. Similarly, when the 100 period Hull Moving Average crosses below the 200-period simple moving average, it’s a sell signal. In the short setup, the stop loss goes above the 200 period moving average. Furthermore, the entry candle should not be on or between the simple and Hull moving average. Simple as that.

So I tested the Hull Moving Average Trading Strategy 100 times, and here’s what I found out.

Number 1. The best part about the HMA strategy is the space between the Hull moving average and the Simple Moving Average. In a long setup, since we are entering the trades when the price is above both Hull and Simple Moving Average, the area between the Moving Averages is acting as the Cloud of the Ichimoku Cloud Indicator. If you have watched the Ichimoku Cloud Trading Strategy Video on the Trading Rush Channel, you already know that cloud is one of the best parts about the Ichimoku Cloud Indicator and how it filters the slow trending and range markets. By using the 200 period SMA with the 100 period Hull moving average, we are creating an area similar to the cloud that filters some of the range markets on a chart.

Number 2. If you take a look at the profit graph on the Trading Rush App, you will notice that Hull Moving Average was making money consistently at the beginning. This was when the price was making big moves after the entry signals. But since the market moves sideways most of the time, a couple of trades were lost in a row. At one point, the Hull Moving Average Trading Strategy lost 12 trades in a row. Now, remember, I tested this strategy with a 1.5 to 1 reward risk ratio to compare it with other trading strategies we have tested on the Trading Rush Channel. But while taking 100 trades with it, I noticed that many winning trades had the potential to make more than 2 times more profit than the risk. In other words, while using the Hull Moving Average Trading Strategy, it can sometimes be better to trail the stop loss to catch the big move, and to get a high reward risk ratio. I have already talked about some of the best trailing stop loss indicators on the Trading Rush Channel, check it out to learn more.

So after taking 100 trades with the Hull Moving Average Trading Strategy, I got an approximate win rate of 42 percent with a 1.5 to 1 reward risk ratio. Since we were booking more profit than the risk, the HMA trading strategy still made money in the Trading Rush App, but this profit was not as good as some other trading strategies we have tested on the Trading Rush Channel. It won 4 trades in a row but lost 12 trades in a row. The Hull Moving Average Crossover strategy is not that bad, it is just that your chances of making good money with it are low. But let’s see where it ranks up against other trading strategies we have tested so far, by giving the Hull Moving Average Trading Strategy a TR score.

If you have watched the Golden Cross Trading Strategy Video or are already familiar with it, you probably realized that the Hull moving average crossover strategy is very similar to the Golden Cross Strategy. And surprisingly, both strategies got the same win rate after testing 100 times. Since the Hull moving average got the same win rate as the Golden Cross, it gets a 4.2 out of 10 in the Win Rate category, just like the Golden Cross Strategy.

It gets a 7.5 in the easy-to-use category. And gets a 4 out of 10 in the Reliability Category. The profit graph of the Hull Moving Average Strategy was slightly better than the profit graph of the Golden Cross Strategy and less noisy when compared with the profit graphs of some other strategies that also got a win rate of around 42 percent. So in the consistent profits category, it gets a 4 out of 10. And in the quality of the Trades Category, it gets a 4.5 out of 10.

So the Hull Moving Average trading strategy gets a TR Score of 24.2 out of 50. And on the Trading Rush Website, it ranks 17th from the top, below the RSI Supertrend Trading Strategy, and above the Stochastic Strategy.

And that’s all.

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50 EMA vs 200 EMA? I took 100 TRADES to find the TRUTH… Trading Strategy

Post author By Trading Rush
Post date January 22, 2021
1 Comment on 50 EMA vs 200 EMA? I took 100 TRADES to find the TRUTH… Trading Strategy

20 vs 200 trading strategies

Tag: Moving Average Trading Strategy

Can the 20 period moving average increase the winrate of this trading strategy? Last time I tested the MACD zero lag trading strategy 100 times with a 200 moving average, and it didn’t have a good winrate. In fact, it was one of the worst trading strategies we have tested on the Trading Rush channel. But what if the strategy got such a low win rate, because of the 200 Exponential moving average, and using a 20 or 50 E MA can increase the winrate? The Faster MACD indicator we saw in the last video, was really bad at showing the end of the pullback in a trend. When the pullback was big, it was giving multiple false signals in a row. So if we use a smaller period E MA instead of 200 moving average, the false signals should be filtered right? Well, why don’t we test the same strategy with the 50 period exponential moving average, to see if the bad strategy can become good because of a different moving average?

Since I have already explained what a Zero Lag MACD is, and the strategy based around it in the last video, lets focus on the 200 and 50 period moving averages this time. In simple words, moving averages are nothing but averages of the previous candles. So when the price is in a range, you can use the moving average to filter bad trades setups. And when the price is trending strongly in one direction, you can use the moving averages to find the average price, instead of buying and selling at the extreme top and extreme bottom. Moving averages, especially the 200 period moving average, also works as a good support and resistance in a trend. For example, here’s a trade analysis I shared on Patreon. As you can see, the 200 E MA was acting as a support, and price made a move up and the profit target was hit. If we plot both 50 and 200 E MA on the same chart, and insert the Zero Lag MACD indicator that lost money in the last video, you can see, that the False signals that were valid with the 200 period moving average, were filtered with the 50 period moving average. But don’t be fooled yet. This is just one example. This doesn’t mean the MACD zero lag strategy will magically become profitable with the 50 E MA. To find out if it actually works in the long run, and to find out if a different moving average can magically turn one of the worst trading strategies into a profitable one, I took 100 trades with it, and here’s what I found out.

Number 1. Just like last time, the profit graph at the start, went in the upward direction. That’s because the trades that were won last time, made a profit this time as well. But when the trend got weaker, some of the trades that were lost last time, were filtered by the 50 period moving average. Now one might think that the 50 E MA is better, but hold that thought. Because last time, the profit graph in the Trading Rush App, went down soon after making this upward move. And if you look closely, the profit graph with the 50 moving average is also starting to go down. But why? MACD zero Lag gives false signals when the pullback is big, but we are filtering the longer pullbacks with 50 E MA right? Well yes, but now we have another problem.

If you look at the profit graph, you will notice that it still looks very similar to the previous one. That’s because, some of the trades that were lost last time, were filtered by the 50 E MA, but it also filtered some of the winning trades. So the MACD zero lag with the 50 E MA filter, was not that better than the MACD zero lag with 200 E MA filter. But, if you look at the profit graph, you will see that it went up near the end. What made it do that? The winrate with 50 E MA was as bad as the winrate with 200 E MA right? Well, yes! With a 50 period moving average, the MACD zero lag strategy gave less entry signals in the same time period. So I had to take more trades to reach the 100 trades mark. On the same market structure, changing the moving average didn’t make a significant difference to the winrate. The win rate was just as bad as last time. And it went slightly up at the end, because in the new market structure, the price was trending strongly, and few trades were won in a row. MACD zero lag with 200 E MA, would have also made a profit on this new market structure.

Now one might say, if we would have continued to take trades on this new structure, the profit graph would have gone up, and the win rate would be profitable. To respond to that, I took another 100 trades, so I took 200 trades in total with the MACD zero lag and 50 E MA, and this happened.

But subscribers of the Trading Rush Channel, especially who have watched the “Why I test strategy only 100 times” video, can already tell that there is a very high probability, that the win rate you will get after testing a strategy 1000 or 10,000 times, will be very close to the winrate we get after testing a strategy 100 times.

When we tested the MACD zero lag with 200 E MA, it got a 33 percent approximate winrate. And in this video, when we tested it with 50 E MA, it got a 35 percent approximate winrate. The winrate was slightly high because of the new market structure near the end. But when we continued to take trades in the new market structure, the profit graph went slightly up because of a strong trend. But after 200 trades, it still got a bad winrate. So it didn’t become a profitable trading strategy on a different structure, and near the end, when the strong trend was over, the strategy gave multiple losing trades in a row, just like it did near the beginning. If I had continued to take trades after the 200 mark, the winrate could have gone down near the 35 percent mark.

Now remember, if a strategy got a 35 percent win rate after 100 trades, it is probably not going to get a 60 percent winrate after 200 or more trades. Similarly, if strategy got a 65 percent winrate after 100 trades, it is probably not going to get a 30 percent winrate after 200 or more trades. That’s because, the more trades you take, the less fluctuations you are going to have in your winrate number. So if a strategy gets a 65 percent winrate after 100 trades, there is not really a point in testing it 10000 or 100000 times. Because number 1, there is a high chance you will get a winrate that is slightly less or more than what you already got after 100 trades. And number 2, you are not finding the winrate of a coin toss where the subject remains exactly the same even after 100000 coin flips. The Forex and Stock Market are always changing. So you can say that the accurate winrate doesn’t exist in trading. If something is working now, take advantage of it. If it stops working after a couple of years, simply stop using it.

But in the end, after taking 100 trades with the 50 E MA and MACD zero lag indicator, we found out that, if a trading strategy gives horrible entry signals in the first place, changing moving average won’t make a significant difference to the winrate. So select a profitable trading strategy first, then use a moving average to find the trend direction.

That’s all!

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Simple Moving Average Crossover Strategy risked 100 TIMES?

Post author By Trading Rush
Post date August 30, 2020

SMA crossover strategy

Tag: Moving Average Trading Strategy

What’s the real win rate of the Simple Moving Average Crossover strategy? I have already tested the Exponential moving average strategy 100 times to find its real win rate. Well, in this video, why don’t we test the Simple Moving Average Trading Strategy 100 times, to find its real win rate. I have tested many different trading strategies on the Trading Rush channel, if you are a new to trading, watch them. And don’t forget to subscribe to the Trading Rush channel, and ring that notification bell. After all, you don’t want to risk your money on a strategy that doesn’t even work.

The Simple Moving Average Trading Strategy consists of 2 or more simple moving averages. All the moving averages used, have different input lengths. But the most common simple moving strategy, is the 9 and 21 period moving average strategy. In this strategy, a trader uses the crossover of the moving averages, to find entry and exit signals. Since simple moving average smooths out price data, you can gather a lot of info about the price direction. With the help of a simple moving average, even your dog can identify if the price is trending upwards, downwards, or is in a range. But if you combine two simple moving averages that smooths out price data, you can create a simple but effective trading system.

Here’s how the SMA crossover strategy goes. When the 9 period SMA, crosses above the 21 period SMA, it’s a buy signal.

Similarly, if the 9 period SMA, crosses below the 21 period SMA, it’s a sell signal.

Here, the 9 period simple moving average, is the fast moving average. And the 21 period SMA, is the slow moving average.

Now, if you take trades using this SMA crossover setup, where should you put your stoploss?

Well, in the long setup, when the 9 SMA crosses above 21 SMA, you can set your stoploss just below the swing low.

Similarly, in a short setup, when the 9 SMA crosses below the 21 period SMA, you can set your stoploss below the swing high.

Now, you can trade using this simple setup, but it’s not very effective, and I don’t recommend it, here’s why.

You see, if you can find where price wants to go in the long run, your job is half done. If you can identify where the price is trending in the long term, you are one step closer to making good money in trading. That’s because, when price is in a trend, it tends to move in one direction for a long time. If you take trade in the direction of the long term trend, you can achieve higher and better reward to risk ratios. In simple words, you will make more money. And you can easily find that direction of the long term trend, using another moving average. Usually, I use 200 Exponential moving average to find the long term trend. But this time, since the topic is about simple moving averages, I have used 200 period simple moving average to find the long term trend direction.

If price is above the 200 SMA, it’s an uptrend, and we should only look to buy. If price is below it, it’s a downtrend, and we should only look to sell.

So here’s how our complete modified Simple Moving Average Crossover strategy goes.

Only take buy entry signals, when 9 period SMA, crosses above 21 period SMA, and price is above the 200 period Simple Moving Average.

Similarly, only take sell signals, when 9 period SMA, crosses below the 21 period SMA, and price is still below the 200 period simple moving average.

I have tested this Simple Moving Average Crossover setup 100 times, with just few simple tweaks. These tweaks are there to make the strategy more effective in the long run.

When the crossover strategy gives a buy entry signal, the candle that is giving the entry signal, should be above the moving averages. If it is slightly touching it, it’s still a valid setup. Furthermore, the entry candle has to be above all 3 moving averages.

Similar thing applies to the short setup. When the crossover strategy gives a short entry signal, the candle that is giving the signal, should not be touching the moving average. A slight touch is fine. Also, the entry candle has to be below all 3 moving averages.

So, I tested Simple Moving Average Crossover Trading strategy 100 times, and here’s what I found out. I’m using the Official Trading Rush App for backtesting this strategy. You can use it while testing your trading strategy as well. It will calculate the win rate, the number of winners and losers, and other data in just one click. Saves a lot of time. You can download the Official Trading Rush App from the Google Play Store, or using the link in the description.

Number 1. The best part about the SMA crossover strategy I found, was the ability to show the end of a pullback, or at least that’s what I thought at first. Let me explain. You see, by adding the 200 period Simple moving average, we have turned this strategy into a trend following strategy. The 200 SMA is showing the trend direction, and the 9 and 21 SMA crossover is giving the entry signals. Most of the time, the SMA crossover setup gave good entry signals at the end of the pullback. But that was also a kind of disadvantage.

Number 2. Unlike Exponential moving average, where latest candles are given more priorities while calculating the average. In a Simple Moving Average, all the candles are given equal priorities while calculating the simple average. Because of this, the SMA crossover strategy was giving late entry signals than the Exponential moving average crossover strategy. And on top of that, all moving averages are lagging indicators. They possess no ability to predict the future movements.

When there was a good long term trend going on, the signals I got from the SMA crossover strategy were profitable, but sometimes, the signals were so late, that the trend was already over.

Number 3. In this back test, I lost most number of trades, when the long term trend was not strong enough, or was trending sideways. This could be easily avoided by using some other indicators, or by simply looking at the 200 period moving average. If the moving average is looking flat, there is no trend going on. I have also made videos on other indicators that identify if the market is trending or not. Check them out if you want.

So after testing the Simple moving average crossover strategy 100 times, I found that the win rate of the strategy is approximately 48 percent. What this means is, the SMA crossover strategy, and the Exponential moving average crossover strategy, have a very similar win rate. Both of them are profitable strategies. Since most people will use a Reward risk ratios of higher than 1, I used a 1.5 to 1 reward risk ratio, and because of that, I was able to make money, even with a win rate that is less than 50. This is not the best strategy we have tested so far. In this back test, I won 6 times in a row, and lost 6 times in a row.

Other indicators performed way better than this. If you want to know win rates of other trading strategies, check out other videos on the Trading Rush Channel, or on the Trading Rush Website. And if you want to use the Trading Rush App while testing your strategy, feel free to do so. You can download it from the Play Store, or using the link in the description.

That’s all. Now you know more about the Simple Moving Average Crossover Strategy. Like the video if you liked it. Subscribe to the Trading Rush Channel if you want to see other strategies tested 100 times, to see their real win rates. And thanks to everyone for watching.

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5 BIG Moving Average Strategy MISTAKES

Post author By Trading Rush
Post date July 6, 2020

stock trading stocks forex trading moving average startegy strategies a