42 replies to this topic

[CLK]

Thanks, Hiker.

[Mr Dev]

Here is that Dow indu screen shot


and for fun here it is on a choppy 55m chart which gave a false baby cross yesterday, but
showing something more today

Edited by Mr Dev, 17 April 2007 - 02:30 PM.

[Wallcrawler]

I have been tracking hiker on this method for some time now... I have used it for months now...realtime trading the ES ... and all I can say is it has made me alot of money. I use the 1 min and the 3 min charts mainly... but works great for swing trades with the 13 to 60 min. Anyways gotta run... Thanks hiker again... great method!!!!

[hiker]

thanks for letting me know, WC...glad to hear our conversations some time ago have proven useful.

Edited by hiker, 17 April 2007 - 03:28 PM.

[denleo]

Hiker, Mr. DEV, could you explain to me how you use this indicator? At first I thought it is an illusion, but now I see you got something very interesting going. I guess I am stupid when it comes to learning new things. Could you tell me how it works? Thanks Denleo

[hiker]

Dennis little short of time, so this is best I can do right now - see book: Secrets of the Underground Trader by Jea Yu and Russell Lockhart ISBN 0-07-141737-0 page 17 introduces the MA's and especially the displaced 3 Chapter 3 and Chapter 4 talk about not fighting the trend on the 13-minute chart pages 273 to 280 are of interest keep in mind this book and the trading system is intended for scalp type trades...I am using the system for longer trade setups.

Edited by hiker, 17 April 2007 - 03:35 PM.

[jjc]

Thx Hiker. I've been trying to get my head around why it works.... Here's how I think it works: An EMA is a fancy low pass filter if you think of things in the frequency domain. It filters out higher frequency harmonics and allows you to follow the underlying (lower harmonic) swing. The "fancy" part (exponential vs simple moving average) is that it allows more components of the higher frequencies thru on more recent samples and fades them as they age. By shifting the ema back three bars your removing the propagation delay thru the filter creating a lead lag network of sorts. When the price signal runs above the lead lag network output the signal contains (many) higher frequency components working in additive phase to push the signal above the filters output. These higher frequency components presumably are the result of the buying "impulse" of the late comers to the rally pushing the overall price (signal) higher while the lower order harmonics are entering a phase where they contribute less to the overall price. Once the buying impulse ends, the higher order frequence components of the signal disipate and price declines.

[hiker]

jj...

page 17 of the book contrasts more simply than you state above the utility of the 3 ema vs. the displaced 3 ema...you may be correct. let's watch over time whether both the displaced 3 ema and the 5 sma continue to move up with price on this daily in the future..perhaps it is a learning example going forward:

[jjc]

Thanks. I'll have to pick up a copy of the book. If my theory is correct it would not work as well in a less emotional market. For example with the 10 yr, where the impulse to buy on a rising trend would not be as high; but it would work quite well with gold.

[jjc]

Thanks. I'll have to pick up a copy of the book.

If my theory is correct it would not work as well in a less emotional market. For example with the 10 yr, where the impulse to buy on a rising trend would not be as high; but it would work quite well with gold.

Started to play with it a bit; It is deceptive when looking at a chart because it carries future information back in time 3 bars.

The lead portion of the network requires you to do a comparison with price 3 bars back in time.

Looking at Gold and TLT I do not see much of a difference.

One way to get an approximation of the lead portion of the network before the 3 period delay is to look for a negative three period ROC of the 3 ema.