by Coondawg71 » Wed Nov 30, 2011 11:27 am
In supplement of prior post...AND in conjunction with the post by DWetherell...
Keep in mind this all gears around SHORT TERM trading usage (5min, 15min chart time frames) considering I personally did not change any default parameters other than the slow and fast moving average methods. Longer term trades with these settings has not been considered as of yet for the simple reasons: 1. Market is too volatile 2. personal preference to short time frames for the sake of liquidity and reduction of capital loss.
Zero and Hull MA work well to show the beginning of the trends (heat map portion of the WPR Smoothed Indicator) due to the fact of the obvious lack of "lag". In comparison of these two averages you will see they both show earlier entries and exits on the the "heat map" portion of the WPR Smoothed Indicator and as a consequence you will see more breaks in the trend of the heat map. HULL by design will be smoother than the Zero Lag but still very sensitive to due the lack of lag. This is where the beauty of this creation, WPR Smoothed, comes to light. It is an indicator within an indicator with yet another indicator. With all of these elements comprising the WPR Smooth, you can trade in a precise fashion.
My observation is this:
1. Use the heat map as a precise signal beginning/ending of a new trend and establish respective position.
2. Use WPR1 in the case of this indicator (green line) to pinpoint my overbought/oversold points (I personally prefer more extreme points than most people{my opinion is that is allows price to catch up with with indicator and therefore more accuracy} of -10 and -90 or even -5 and -95 if I am visually trading . This is a point in a position where a trader would start to scale out of a position, possibly closing 50% for example. My preference is to close out 100%.
3. Close a position entirely when the Slow MA (red line) crosses the Fast MA (blue line) which coincides with rule #1 due to end of trend.
- Attachments
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- Comparison of WPR Smoothed Average Methods