jim_c_hill
61 posts
msg #27220
- Ignore jim_c_hill |
7/5/2003 10:53:10 PM
I have designed and looked at many filters to do short/medium term trading, one week to several months. The ones that give great performance over several months show that they can be often difficult to trade if there is a down draft in the market during the general uptrend. Some filters work great in bull markets but fail badly in bear market. I suggest the following if you are interested only in long trading for the one week to longer time period and are using filters that don't work well in down markets.
1. Using www.bigcharts.com or your own software, such as metastock, plot an index that you follow such as djia or sp500 or....
2. Use weekly data and plot a macd indicator. The parameters can be slightly shorter than the ones used for daily work.
3. Plot the histogram of the macd and its ema.
4. If weekly histogram is positive, use your filter.
5. If weekly historgram is negative do not use your filter.
This is not a perfect approach but it will keep you out of long bear markets and get you into the major part of a bull market.
You can modify the above, but in general it has proved valuable to me to advise me of how to trade in terms of the type of market.
JH
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