Gold as a classroom for one midterm-trend procedure

A completed gold path

The illustrated gold series rose from about 900 in mid-2009 to more than 1,900 by late 2011. From late 2011 through January 2016, that series declined to about 1,040.

The case study places a midterm-trend horizon between multi-year ownership and selling on intervals of seconds or minutes. Midterm-trend, in this archive, is a holding-period regime read from an adjusted overlay on a mid-horizon chart, longer than trading on seconds or minutes and shorter than multi-year ownership.

Two averages on three-week bars

The gold chart is a three-week series from week 16 of 2009 through week 46 of 2016, overlaid with a 44-period weighted-moving-average and a 47-period simple-moving-average.

A moving-average is a lookback smoother of ordered prices used as an explicit quantitative baseline for the midterm regime. The weighted-moving-average weights recent observations more heavily and, on this series, uses a 44-period setting on three-week bars. The simple-moving-average is an equal-weight lookback average and uses a 47-period setting on the same series.

A glanceable midterm-trend overlay is offered as a check against buying near highs or selling near lows.

One mechanical stance

Trend-following is a directional procedure that stays with an established uptrend or downtrend instead of forecasting a reversal. The mechanical stance described is to participate with the midterm uptrend and to reverse to the short side while that trend is down.

The mechanical-trading-system is a complete, testable set of entry, exit, and abstention rules driven by the midterm regime rather than by narrative forecasts. Buy-and-hold is the contrasting untimed long-only stance that remains exposed through both rising and falling midterm swings.

The write-up states that no trading model is perfect and that every model produces losing trades.