Traders' Roundtable

Looking for feedback

I was taking a look at high volume commodities, back over 5 years, and it became apparent that a 5/20 EMA system using WEEKY BARS appeared to keep the trader on the correct side of the trend.

I think it was Seykota or someone else who (when asked about day trading) stated that the "identification of a trend" becomes harder as the time frame gets shorter.

Anyway, can anyone share some insight or actual experience with trading with weekly bars versus daily bars?

Thanks

To decide on bar interval it helps to first determine what type of trader you are. If you determine that long-term trend following (LTTF) suits your personality then you will likely hold trades for months and years. For example many LTTF traders have been short the USD for 3 years now.

This begs the obvious question, if your trades can last 3+ yrs why would you want to use daily bars ? A more appropriate choice might be between weekly and monthly intervals.

The longer the interval the less noise you have to deal with, the downside is that LTTF is psychologically tough because the wide latitude given to trades can often decimate very "profitable" open positions. As a consequence, unless you have sufficient capital to trade a large number of markets, your equity curve is going to look unappealing for prolonged periods of time.

Yes it appears that weekly data is much more "noise-less" on commodities. In Schwager's Technical Anaylsis of Futures, he states on p.14

"The daily bar chart is most useful for trading purposes, but bar charts for longer data periods provide extremely important perspective."

In Murphys T.A. of the Financial Markets, on p. 182, he states that weekly charts are a very useful tool for trend analysis.

(....maybe I am answering my own question at this point)

However, while it is clear that weekly charts smooth the noise factor, I am unable to determine how to minimize losses while maximizing profits (don't we all want that....) .

Looking for more comments.....

thanks guys!

billpritjr wrote:Anyway, can anyone share some insight or actual experience with trading with weekly bars versus daily bars?

I was looking at you chart for Sugar and it looks like you're not using back-adjusted data. The one below is a back-adjusted weekly chart (CSI data) for Sugar with 5/20 EMA crossover.

best regards, as ever

I did a 20/60 EMA crossover with weekly bars and a 100/300 EMA crossover with daily bars, i.e. I simply multiplied the daily EMA lengths by 5.

billpritjr wrote:In Murphys T.A. of the Financial Markets, on p. 182, he states that weekly charts are a very useful tool for trend analysis.

I guess that intra-day,daily,weekly or monthly are just a way to look at prices and what does matter is the timeframe or length of your base indicator, moving average, channel or whatever.

best regards, as ever