TIME-DRIVEN OR EVENT-DRIVEN?

A moving average system is time-driven; that is, the moving average closes in on current prices when the price movement slows. In Figure Exxon (XOM) prices move sideways from January through mid-April 1997, before the sideways period. The moving average tracks rising prices smoothly, and then turns down at the beginning of March although prices only show a slight decline. Using the trendline for the buy and sell signals forces us to close out our trade at the March lows, although prices are $1 higher one month later.
This characteristic of the moving average can’t be removed. It is a benefit when prices turn slowly from up to down, and a problem when prices slow down and then continue in the same direction as in Figure
A clear example of an event-driven trend is the breakout. That a breakout that creates an up ward trend begins with a new high and ends with a new low. The trend doesn’t change unless prices move to new highs or new lows. You can consider a new high price as being caused by an event: a news release, an earnings report, or a change in government policy. Prices can drift up and down within a reasonably small range and the trend doesn’t change.
Using a 40-day rolling breakout applied to XOM, we see nearly the same trades as when we used the moving average except that prices failed to make a new low in March, and the breakout trend held its long position.
The rolling breakout is not entirely immune from time change. The rolling calculation period moves forward in time. If prices become less volatile, then the highs and lows that trigger a new buy or sell signal will get closer together. Two methods that are completely independent of time are swing charting and point-and-figure charting, and the trading signals that they generate.