Tuesday, 4 October 2011

WEVOMO + Adaptive Smoothing Moving Average in a Guppy Setup

I've gone through a number of Moving Averages (some of the Moving Averages I have in the previous post are not correct; I'll have that fixed today though). I visited the website Forex-TSD (see my Top Website List to right panel), and found a indicator that had all the Moving Averages together in a convenient package, so that was very helpful in my MA comparisons. I also found a another indicator that weighs volume, movement-adjustments, and a linear weighted moving average together to produce very accurate lines (the author, mladen, called it WEVOMO; this author is worth tracking if you have a Metatrader platform because he puts out really good indicators from time-to-time; as of late most of the really good indicators are being produced in the 'Elite' section / payment section of Forex-TSD). In addition, the author also produced a Adaptive Moving Average that has the amazing ability to resist the small news jumps that can cause us so much grief. This indicator is called Adaptive Smoothing, and it comes with a symbiotic indicator called the Adaptive Smoothing Alpha.
I decided to put the WEVOMO to a Guppy Multi-Moving Average setup with the Adaptive Smoothing MA as the early indicator, and it came out like this:
I gotta admit, if this setup doesn't work me then it can be at least the coolest looking setup I've ever made.
The idea with this setup is:
  • If the Adaptive Smoothing MA (large pink line) moves passed the last blue line then we buy/sell
  • If the Adaptive Smoothing Ma remains in the blue lines, then we do nothing
  • The 200 period WEVOMO (white lines) acts a buffer for some of the whipsaw moves (doesn't work 100% of the time, and it is almost unnecessary, but I still feel it necessary to include it)
  • Fast WEVOMO (red lines) acts as the error bars for the Adaptive Smoothing MA (the 'retail traders')
  • Slow WEVOMO (blue lines) acts the main buffer system (the 'big money')
 I still need time to work it out, but yeah, this is the skinny of it.