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The 20, 35, 50 MovAvg crossover comes from a presentation at the
Trading Expo in Chicago last year by Rick Bensignor, editor of the
book "New Thinking In Technical Analysis." It's a trend following
system which he calls: "Triple Moving Average Path (TMAP)." It's
intended to capture at best 50% of a move, based on these specific
rules:
1. For longs, the 20 must be at a higher level than the 35 and the
35 above the 50. Price must be above the 20.
2. All must have positive slopes.
3. All three must be spread apart from each other, appearing
somewhat parallel.
4. When the 20 flattens out, know that price has stopped going up
and the trend is in danger of changing -- Sell at least 50% of the
position. Get out of the other 50% if the 20 closes below the 50.
5. When the 20 turns up again, reinitiate the position as long as
the 35 and 50 are still positive.
6. If the three averages are flat, the trend is neutral and your
favorite oscillator is employed for potential setups.
7. For shorts, everything works in reverse.
If someone can setup a system tester on these rules, it would be
interesting to see how it plays out.
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