Why Perfect Order Loses & How to Win: Proven Strategies

1. Introduction

Perfect Order is one of the popular technical analysis methods used by many traders. This method uses moving averages to determine market direction and aims to enter trades in line with the trend. Theoretically, it is a very effective trend‑following approach and is widely used by everyone from beginners to advanced traders.

However, in reality many hear the claim “I can’t win even using Perfect Order.” Why is that? This article will clearly explain the basic mechanics of Perfect Order, the reasons for losing, and specific improvements to increase your win rate.

The goal of this article is for readers to gain a deeper understanding of Perfect Order and apply it to real trading. So, let’s start by looking at the fundamentals of this method.

2. Fundamentals of the Perfect Order

The Perfect Order is a trading method that uses multiple moving averages to determine market direction. This section provides a detailed explanation of the basic concepts and mechanics of the Perfect Order.

2.1 What Is the Perfect Order?

The Perfect Order is known as a method that uses the following three moving averages.

1. Short-term moving average (e.g., 5‑day or 10‑day line)
2. Mid-term moving average (e.g., 25‑day line)
3. Long-term moving average (e.g., 50‑day or 100‑day line)

When these moving averages are in the state where the short-term line is above the mid-term line, and the mid-term line is above the long-term line, an uptrend is suggested. Because this ordering is “perfect,” it is called the Perfect Order.

Conversely, in a downtrend, the short-term line is below the mid-term line, and the mid-term line is below the long-term line. This condition is commonly used as a sell signal.

2.2 Expected Benefits of the Perfect Order

One reason the Perfect Order draws attention is its visual clarity. By using moving averages, even beginners can easily grasp market direction.

Clearly Shows the Trend

The Perfect Order is highly effective when the trend is strong. The alignment of moving averages confirms that the market is moving in a single direction. It is especially suitable for buying entries during uptrends and selling entries during downtrends.

Simple and Intuitive

Because moving averages provide signals in a clear “arrangement” shape, they are far more intuitive than other complex indicators. This makes the method popular as a technique that beginners can relatively easily use.

Guide for Entry Timing

The formation of a Perfect Order can indicate the start or strengthening of a trend, serving as a guide for entry timing.

2.3 Basic Settings for Moving Averages

When using the Perfect Order, the settings of the moving averages are key. Below are the commonly used settings.

• Short-term moving average: 5–10 days
• Mid-term moving average: 25 days
• Long-term moving average: 50–100 days

These periods are merely examples and can be customized according to market conditions and trading style.

3. Reasons You Can’t Win with the Perfect Order

The Perfect Order is a very simple and effective technique, but many traders feel they aren’t getting the results they expect. In this section, we will explain the specific reasons why the Perfect Order may not lead to wins.

3.1 Entry Timing Is Delayed

Because the Perfect Order generates signals only after the moving averages align, entry timing can be delayed. Since moving averages are calculated from past price data, the signal often lights up when the trend is already underway.

Example

• In an uptrend: You may miss the initial move and end up entering after the price has already reached higher levels.
• In a downtrend: Similarly, a sell entry signal may appear after the price has already dropped significantly.

This delay worsens the risk‑to‑reward balance and can lower your win rate.

3.2 Misuse in Ranging Markets

Since the Perfect Order is a trend‑following method, it does not work well in a “ranging market” where no clear trend exists. The moving averages cross frequently, causing confusing signals that can lead to losses.

Characteristics of Ranging Markets

• Because price moves up and down within a fixed range, even when the moving averages align, the market can quickly reverse direction.
• Especially in low‑volatility markets, false signals occur frequently.

In such situations, using the Perfect Order can be counterproductive, so it should be combined with other methods.

3.3 Insufficient Combination with Other Indicators

Relying solely on the Perfect Order for trading is another reason for not winning. It’s difficult to grasp the market’s full picture using only the arrangement of moving averages, so combining other indicators is necessary.

Why You Should Combine Other Indicators

• RSI (Relative Strength Index): By checking market overheating, you can determine overbought or oversold conditions.
• Bollinger Bands: Visualize volatility and help reduce false signals.
• MACD (Moving Average Convergence Divergence): Provides supplemental confirmation of trend strength and turning points.

By combining these, you can improve the accuracy of the signals generated by the Perfect Order.

3.4 Moving Average Setting Mistakes

One reason the Perfect Order may not win is that the moving‑average periods are not set appropriately.

Common Setting Mistakes

• Periods that are too short: Signals occur frequently before a trend forms, increasing false signals.
• Periods that are too long: Entries lag the trend, increasing risk.

It’s important to adjust settings to match market characteristics and your own trading style.

4. How to Effectively Use the Perfect Order

To lead the Perfect Order to success, simply looking at the arrangement of moving averages and entering is not enough. This section explains concrete methods for effectively using the Perfect Order.

4.1 Proper Moving Average Settings

The period settings of moving averages are a key point for effectively leveraging the Perfect Order. Instead of sticking to generic settings, adjust them to fit your trading style and market conditions.

Recommended Settings Example

• Short-term moving average: 5–10 periods (captures the initial move of the trend)
• Mid-term moving average: 25 periods (confirms trend stability)
• Long-term moving average: 50–100 periods (determines the overall trend direction)

Key Points

• Shorten the short-term line in high‑volatility markets.
• For long‑term trades, increase the lengths of the mid‑ and long‑term lines to improve reliability.

4.2 Combining with Other Technical Indicators

Because the Perfect Order alone can generate false signals, using other indicators in conjunction can improve signal accuracy.

Recommended Indicators

• RSI (Relative Strength Index)
• Measures market overheating and identifies overbought/oversold conditions.
• Example: Avoid a buy entry if RSI is 70 or higher.
• Bollinger Bands
• Visualizes volatility expansion and contraction to gauge appropriate entry timing.
• Example: Avoid buying near the upper Bollinger Band.
• MACD (Moving Average Convergence Divergence)
• Analyzes trend strength and turning points complementarily.
• Example: Consider entering when the MACD line crosses above zero.

Combining these reduces false signals from the Perfect Order and improves win rates.

4.3 Optimizing Entry and Exit

When using the Perfect Order, it is essential to clearly define entry and exit timing.

Entry Rules

• Trend confirmation: Ensure short-, mid-, and long-term moving averages are aligned.
• Additional confirmation: Use other indicators (e.g., RSI, Bollinger Bands) to verify signal reliability.
• Pullback entry: Target the moment price approaches the short-term moving average.

Exit Rules

• Take profit: Confirm signs of weakening trend (e.g., moving average crossover).
• Stop‑loss setting: Base the stop‑loss point on the nearest support or resistance line at entry.

Example

• During an uptrend, confirm a pullback to the short-term moving average and enter a buy.
• Take profit when price breaks below the mid-term moving average.

4.4 Assessing Market Conditions

The Perfect Order works best in markets with a clear trend. Therefore, keep the following points in mind.

• Trending market: Use the Perfect Order.
• Ranging market: Consider other trading methods (e.g., support/resistance trading).
• Market news and fundamentals: Avoid entries during times prone to sudden moves.

5. Winning Trader Case Studies

Traders who effectively use the Perfect Order to achieve results share several common traits. This section presents examples of successful traders, explaining specific trade strategies and approaches.

5.1 Example Trade Scenarios

Success Example in an Uptrend

A trader applied the Perfect Order to a stock that was forming a clear uptrend. Below is the specific trade scenario.

Method

1. Trend Confirmation:

• Confirm that the 5‑day, 25‑day, and 50‑day moving averages are aligned and the price is above the 5‑day line.
• Check that other indicators (RSI) do not show overheating.

1. Entry Timing:

• Enter a long position when the price, after briefly approaching the 5‑day moving average, turns upward again.

1. Exit Point:

• Take profit when the price falls below the intermediate moving average (25‑day line).

Result

This trade captured a 10% price move from entry while keeping risk to a minimum.

Failure Example and Lessons in a Range Market

Conversely, we present a failure case when the same method was used in a ranging market.

Method

1. Lack of Trend Confirmation:

• Entered when moving averages briefly aligned despite no clear trend.

1. Overreliance on Signal:

• Did not use other indicators (RSI, Bollinger Bands), relying solely on the moving‑average alignment.

Result and Lessons

• The market moved opposite within the range, resulting in a loss.
• The lesson learned was the importance of limiting the Perfect Order to trending markets.

5.2 Introduction of Specific Strategies

Using the Perfect Order in Day Trading

Successful day traders apply the Perfect Order on short‑term timeframes.

Method

• Timeframe: 5‑minute or 15‑minute chart
• Short‑term MA: 3 periods, Mid‑term: 8 periods, Long‑term: 21 periods
• Other indicator: Use MACD to supplement trend strength

Entry Conditions

• Short, mid, and long moving averages are aligned and price is above the short‑term MA.
• Enter when MACD crosses above the zero line.

Exit Conditions

• Take profit when MACD reverses.
• Stop loss when the moving averages cross.

Result

The strategy is effective for targeting short‑term price moves, allowing multiple trades per day and generating stable profits.

Using the Perfect Order in Swing Trading

Swing traders focus on mid‑ and long‑term moving averages, taking time to confirm the Perfect Order before acting.

Method

• Timeframe: Daily or 4‑hour chart
• Short‑term MA: 10 periods, Mid‑term: 25 periods, Long‑term: 50 periods

Entry Conditions

• Moving averages align and price rebounds after returning near the short‑term MA.
• Enter when Bollinger Bands, after a period of contraction, begin to expand.

Exit Conditions</=”wp-block-list”>

• If trend strength weakens (e.g., the angle of the moving averages becomes flatter).
• If price falls below the mid‑term moving average.

Result

The approach works for capturing large trends, achieving substantial profits over weeks to months.

5.3 Key Points for Success

We summarize the common factors among successful traders.

• Accurately assess market conditions: Use the Perfect Order only in trending markets.
• Confirm signals: Combine other technical indicators to improve accuracy.
• Risk management: Set clear stop‑loss levels to keep risk minimal.

6. Points to Note When Using the Perfect Order

The Perfect Order is a very useful indicator for trading, but its use comes with several cautions. This section explains the points and risks you should know to effectively leverage the Perfect Order.

6.1 Importance of Risk Management

In trading, no matter how good a method you use, risk is always present. When using the Perfect Order, thorough risk management in advance is required.

Setting Stop-Loss Levels

• Basic stop-loss: Set the stop-loss point based on the nearest support or resistance line at the time of entry.
• Guideline for proportion: Calculate the maximum loss as 1–2% of your capital and avoid taking risk beyond that.

Key Points for Money Management

• Limit the amount invested per trade to avoid large losses.
• Diversify your trading capital to reduce the risk of losing everything at once.

6.2 How to Identify False Signals

With the Perfect Order, false signals can occur especially in ranging markets or markets with low volatility.

Techniques to Avoid Being Fooled

1. Check multiple timeframes

• Because signals occur frequently on shorter timeframes, refer to longer timeframes to confirm the overall trend.

1. Utilize other indicators

• Combine RSI, MACD, Bollinger Bands, etc., to improve signal accuracy.
• Example: If RSI is not above 50 and the trend is weak, refrain from entering.

1. News and fundamentals analysis

• Relying solely on technical indicators is risky when sudden news or economic events occur.
• Adopt an approach that combines fundamentals with technical analysis.

6.3 Flexible Adaptation to Market Conditions

The Perfect Order is especially effective in trending markets. However, it can be difficult to apply in certain market conditions, so flexibility is required.

Identifying the Appropriate Market Environment

• Trending market: When there is a clear direction, prioritize using the Perfect Order.
• Ranging market: Consider other methods (e.g., support/resistance analysis).
• High volatility market: Watch for short-term rebounds or rapid changes and sometimes refrain from entering.

Avoid Overconfidence

• It is important not to judge the entire market solely with the Perfect Order, but to improve accuracy by combining it with other methods and analyses.

7. Frequently Asked Questions (FAQ)

We’ve compiled common questions about the Perfect Order. Through these questions and answers, we hope you can deepen your understanding of the Perfect Order.

Is the Perfect Order suitable for beginners?

Answer:

The Perfect Order is a simple method that determines trends based on the arrangement of moving averages, and it is relatively suitable for beginners. However, the following points require attention.

• Points to note:
• Combine with other technical indicators to avoid being misled by false signals.
• Understand that it works poorly in ranging markets and use it in markets where a trend is present.
• Recommended practice method:
• Use demo trading to verify signal accuracy and entry timing.

Which time frame is optimal?

Answer:

The effectiveness of the Perfect Order varies by time frame. Choose according to your goals and trading style.

• Short-term trading (day trading):
• Use 5-minute or 15-minute charts.
• Requires quick entry and exit.
• Mid-term trading (swing trading):
• Use 4-hour or daily charts.
• Capture the broader trend movement, allowing for more relaxed trading.
• Long-term trading:
• Use weekly or monthly charts.
• Suitable for following long-term trends and avoiding frequent trades.

Can it be combined with other trading methods?

Answer:

Yes, and it is actually recommended. Since the Perfect Order is based on the arrangement of moving averages, it may be insufficient on its own. Combining it with other methods can improve trading accuracy.

• Recommended combinations:
• RSI: Measures market overheating and assists entry timing.
• Bollinger Bands: Visualizes volatility and identifies when price is converging or diverging.
• Support and resistance lines: Identify key price levels.
• Fundamental analysis: Takes into account sudden news and economic events.

Are there ways to reduce losses with the Perfect Order?

Answer:

To reduce losses, it is important to focus on the following points.

1. Risk management:

• Set a clear stop-loss line and keep the maximum loss within 1–2% of your capital.

1. Signal verification:

• Combine with other indicators to increase signal reliability.

1. Assess market conditions:

• Use the Perfect Order only in trending markets and consider other methods in ranging markets.

What is the most important thing when using the Perfect Order?

Answer:

The most important thing is to use it in trending markets. The Perfect Order delivers its maximum effect when price moves with a clear direction.

• How to determine a trending market:
• Check whether the long-term moving average is gently sloping.
• If Bollinger Bands are expanding, it is likely that a trend is forming.

8. Summary

In this article, we explained Perfect Order in detail, covering its basics, specific applications, reasons for not winning, and common questions. Finally, we summarize the key points and outline the important aspects for applying Perfect Order to actual trading.

Advantages and Limitations of Perfect Order

Advantages

• Visually easy to understand: When moving averages align, the market direction becomes clear.
• Strong in trending markets: In markets with a clear trend, it serves as an effective method for timing entries and exits.
• Beginner-friendly: No complex calculations or tools needed; simply checking the alignment of moving averages is sufficient.

Limitations

• Does not work in ranging markets: In non-trending markets, false signals tend to proliferate.
• Timing can be delayed: Due to the lag of moving averages, entry and exit timing may be late.
• Insufficient on its own: Needs to be combined with other technical indicators or fundamental analysis.

Key Points for Success with Perfect Order

1. Use in trending markets:

• Use only in trending markets where moving averages are clearly aligned.
• Combine with other methods in ranging markets.

1. Combine with other indicators:

• Utilize RSI, Bollinger Bands, MACD, etc., to increase signal reliability.

1. Practice thorough risk management:

• Set stop-loss levels and avoid taking excessive risk.

1. Clarify entry and exit rules:

• By following the rules, avoid emotional trading and aim for stable long-term results.

1. Learn through practice:

• Practice with demo trading to see how it works in real markets.
• Find settings and approaches that fit your own trading style.

Conclusion

Perfect Order is a simple yet powerful trading method. However, its success depends on more than the method itself—it also relies heavily on correctly judging market conditions, combining it with other indicators, and robust risk management. Based on what you learned in this article, be sure to apply it to your own trading.

The key to success is to consistently improve while adhering to the rules. In the world of trading, overnight success is rare, but steady, incremental progress will eventually yield results.

Reference Articles

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