Tag: WMA

I took 100 TRADES with these 2 INCREDIBLY SIMPLE Moving Averages that create a better CHANNEL than..

Post author By Trading Rush
Post date May 29, 2021
1 Comment on I took 100 TRADES with these 2 INCREDIBLY SIMPLE Moving Averages that create a better CHANNEL than..

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Tag: WMA

I took 100 Trades with the moving average channel strategy to find its win rate, and this is what happened.

If you have watched the previous video, you most likely know how to create this ridiculously simple moving average channel. But you see, this moving average channel looks very similar to the Keltner Channels, and in both Keltner Channels and the Moving Average Channel Strategy, we buy and sell when the price opens and closes above or below the channel respectively. If that’s the case, we should expect the Moving Average Channel to perform just as good as the Keltner Channels right? Well, this is what the profit graph looked like when we took 100 trades with it on the Trading Rush Channel. It got a 49 percent approximate win rate, and that is a profitable win rate because the reward risk ratio was higher than one. But if you look closely, you will notice that the Keltner Channel made a good profit at the beginning, then gave back the profit and made a loss, and then the profit line went back in the upward direction again. When I took 100 Trades with the Moving Average Channel on almost the same market structure, the profit line went in the upward direction just like the profit line of the Keltner Channels, but it never lost multiple trades in a row.

Even though the two indicators look similar, many times the Moving Average Channel was giving better signals than the Keltner Channels. Furthermore, the Moving Average Channel gave earlier entry signals, which was a good thing in this case, and filtered some of the false signals since the moving average channel is narrower than the Keltner Channels.

For the first 75 or so trades, the profit in the Trading Rush App was going consistently in the upward direction, and the win rate was around 58 percent. So far these ridiculously simple moving averages that never touch each other, were performing as good as some of the highest win rate strategies we have seen so far. Till the 75 trades mark, the moving average channel had won 9 trades in a row, and only lost 5 trades in a row. But unfortunately, it lost 15 trades in a row soon after the 75 trades mark.

Here’s what it means. The Moving Average Channel performs just as good as some of the best trading strategies for the most part, but its biggest weakness is when the price gets choppy and breaks above and below the channel in a short period of time. The narrower channel that was the reason for earlier and better entry signals than the Keltner Channels, was the reason for too many signals in a row when the price was choppy in a slow trend, especially just before the trend reversal.

The Moving Average Channel Strategy with a 1.5 to 1 reward risk ratio, got an approximate win rate of 48 percent, which actually is very similar to the Keltner Channels Trading Strategy. However, the profit graph on the same market structure was pretty different. On one side, we have Keltner Channels that gives late signals, especially near the end of the trend, and on the other side we have two simple moving averages that give better entry signals, but can’t handle choppy slow-moving markets.

5.8+7+4.5+4.5+6.5

The Moving Average Channel Trading Strategy gets a TR Score of 28.3 out of 50, and ranks 19th from the top, above the Keltner Channels Trading Strategy, and below the Bollinger Bands Strategy.

That’s all.

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These Ridiculously Simple Moving Averages that NEVER touch each other…

Post author By Trading Rush
Post date May 28, 2021

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This is the Moving Average Channel and it is in many scenarios better than the Keltner Channels. This Moving Average is so simple that even your dog can set it up and make money with it. This is not a standalone indicator like the Keltner Channels, instead, these are 2 normal simple moving averages that don’t intersect with each other, creating a channel.

To create a moving average channel, first, you plot a simple moving average. On many charting platforms, it will come with a length of 9 and will calculate the average using the closing prices of the candles. Change the length of this moving average to 20. Then, plot another simple moving average, and set its length to 20 as well. Now you should have two moving averages on top of each other. To separate them and to create a moving average channel, make one moving average calculate its values using the high of the candles. And make the other moving average calculate its values using the low of the candles. On TradingView, you can do that by changing the source of the moving average.

Now you should have two moving averages creating a channel. These moving averages will adjust with the price movement. and will move closer to each other when the price movement is slow. and will move further away from each other when the price is trending or volatile. Remember that these are still simple moving averages. So if you want the moving average to react faster to the price movement, use a smaller period moving average, and if you want the moving average to react slower, use a longer period moving average. But increasing the length of the moving average won’t increase the size of the channel.

In the Moving Average Channel Strategy, the 20-period moving averages are used most of the time. And when the price is between these two moving averages, all entry signals are ignored.

When the price opens and closes above the moving average channel, it’s a buy signal. You can always use a longer period moving average like the 200 E MA to find the long-term trend direction. If the price is in an uptrend, set the stoploss below the pullback. Also, ignore all short signals above the 200 period moving average.

In a downtrend, when the price opens and closes below the moving average channel, it’s a sell signal. Set the stoploss above the pullback of the trend. In a downtrend, since the price has a higher probability of moving in the downward direction, ignore all long signals below the 200 period moving average.

Of course with the same method, you can create a channel with a 200 moving average, to filter some of the false signals in the slow-moving markets. But the moving average channel is mostly used with a short length like 20, to capture strong short-term moves on the smaller timeframes.

To find if it works or not in the long run, we will take 100 Trades with it in the next video and find its win rate.

That’s all.

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I took 100 TRADES with (FASTER) BEST Golden Cross Trading Strategy and this happened Day Trading

Post author By Trading Rush
Post date March 17, 2021
1 Comment on I took 100 TRADES with (FASTER) BEST Golden Cross Trading Strategy and this happened Day Trading

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The golden cross trading strategy is still popular, but it’s old. When we tested the Golden Cross Strategy 100 times, it got a 42 percent approximate win rate with a 1.5 to 1 reward risk ratio and the profit graph in the Trading Rush App went in the upward direction, but it was not that good. The Golden Cross Trading Strategy uses the Simple Moving Averages, and as you already know, the simple moving average is a lagging moving average. In fact, it is slower than the Exponential and Weighted Moving averages. So what will happen if we improve the Golden Cross Strategy by switching the SMA with a faster moving average like the weighted moving average. And that’s exactly what I did. In the last video, we learned more about the weighted moving average and the strategy based around it. So in this video, I tested the better and faster Golden Cross Trading Strategy 100 times, and here’s what happened.

Number 1. Since the Original Golden Cross Trading Strategy got a 42 percent win rate, one can expect a similar win rate with this modified Golden Cross, after all, all we are doing is replacing the slower moving average with a faster one. But surprisingly, the win rate was actually better. In the Trading Rush App, the profit graph of the original Golden Cross went in the upward direction at the beginning, but then started a downtrend and didn’t really came back in the positive territory until the very end. Now remember, both strategies were tested on the same pair, same timeframe, and almost the same market structure. But if you look at the profit graph of the Weighted Moving Average Golden Cross, you will see that it is more consistently going in the upward direction. In fact, it never went into the negative territory at the start even though the market structure was the same.

Why? Why changing a simple thing as a moving average is making such a noticeable difference? There is not much difference between the Weighted and Simple Moving Average, right? Well, when the market movement is really good and the price is making big moves, you won’t notice much of a difference between the entry signals of the two moving averages. One will be earlier than the other, but compared to the big moves price makes in a good trend, they are not that far from each other.

But the problem is clearly visible in the slow-moving markets. As you already know, the price stays in a range most of the time. And when the trend is slow, the weighted moving average is like the Usain Bolt of moving averages, and the SMA is like a turtle. In the slow trending market, the WMA was so fast at reacting to the direction change, that the entry signals it gave were actually profitable. On the other hand, the simple moving average was so slow compared to the WMA, the entry signals were generated near the end of the trend. This is where the Weighted Golden Cross took the lead. This is where the Simple Golden Cross lost money, but Weighted Golden Cross made money.

And as you can see in the Trading Rush App, the Weighted Golden Cross Trading Strategy got a win rate of approximately 48 percent with a 1.5 to 1 reward risk ratio, which is much better than the Original Golden Cross Trading Strategy. When we tested the simple golden cross last time, it made a profit of 500. Profit is still a profit, but the weighted Golden Cross because of the faster and better entry signals, made a profit of 2000 which is a lot better. It lost 7 trades in a row and won 4 trades in a row. The best part is the profit graph. The profit graph of the weighted Golden Cross is more consistent and looks way better than the profit graph of the Simple Golden Cross.

5.8 + 7.5 + 6 + 6.5 + 7.3 = 33.1

And now, if we give the Faster Golden Cross Trading Strategy a Trading Rush Score, you will see that it gets a 33.1 out of 50. And if you come to the Official Trading Rush Website, you will see that it ranks 7th from the top, just below the Ichimoku Cloud, and above the Alligator Trading Strategy. And for reference, the Simple Golden Cross ranks 23rd from the top. So we can say that the Weighted Moving Average definitely improved the Winrate of the Golden Cross Trading Strategy.

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BEST WMA Trading Strategy that gives FASTEST Signals

Post author By Trading Rush
Post date March 16, 2021

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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.