From the October 01, 2012 issue of Futures Magazine • Subscribe!

A complementary approach to trading technical indicators

“Trend filter” (below) shows the strategy that uses both the stochastic and moving average indicators. With the addition of the moving average crossover filter, the results are improved significantly. While the percent profitable remains relatively steady, 73.17% for stochastic only vs. 77.42% with the moving average filter, the average trade net profit and other key metrics show noteworthy improvement. By adding a complementary indicator, we are able to refine the strategy’s criteria to create a more profitable system.

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