# Moving Average Period - Preferences?



## Muschu (2 June 2008)

Hi
I use a variety of MA periods when looking at basic charts.
What I have been tending to do is use a simple 2-line MA200 if looking at a 1-5 year chart; but both a 30 and 200 MA if looking at 1-2 month chart. 
A question however:  If I am looking at a SP over a relatively short period, say 1-2 months, is there a "preferable" MA setting? ie:  Which is associated with greater significance? eg:  As to when the MA is crossed by the SP?
Thanks 
Rick


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## Trembling Hand (2 June 2008)

Muschu said:


> is there a "preferable" MA setting? ie:




YES. What ever you can make sense of. As in all trading setups that is all that should matter to you.


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## Muschu (2 June 2008)

Trembling Hand said:


> YES. What ever you can make sense of. As in all trading setups that is all that should matter to you.




What makes sense to me may not make sense. I have no difficulty acknowledging that. Hence the question.  Does anyone else have a view please?
Thanks
Rick


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## wildkactus (2 June 2008)

rick,
MA's I use are 5 / 23 / 233. 
I use the 5 / 23 on daily and weekly charts, just to indicate graphically a change in trend. the 233 is there just to look at on monthly charts. 

How I got these was by just changing the numbers until I got ones that made sense to me and worked with what I was looking for. You just have to find what is right for you, I don't think there is any right or wrong periods for an MA.
But remember they are a lagging indicator and I find that they are a good quick glance indicator.


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## Muschu (2 June 2008)

wildkactus said:


> rick,
> MA's I use are 5 / 23 / 233.
> I use the 5 / 23 on daily and weekly charts, just to indicate graphically a change in trend. the 233 is there just to look at on monthly charts.
> 
> ...




Many thanks WK.  Interesting to see what others do.  I have been mainly using 30 and 200 and can get quite a different perspective as to where the SP sits in relation to the MA of course.

I am reading a book by Stan Weinstein - only 40 pages to date. He makes constant reference to a 200 [30 week] MA as an aid in decision-making.  Haven't seen him use a shorter time frame yet.  

I know they are a lagging indicator and serve a valuable purpose.

Thanks for the comment.  I appreciate it.


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## RobinHood (2 June 2008)

Depends on your time-frame.


When I'm position trading US stocks:

I use 50 and 200dma over price, and 50dma over volume, for the reason that many institutions/players will be watching these and even use them as buying support.


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## Whiskers (2 June 2008)

Personally I didn't use MA's much until more recently when I came up with a combination of three different types that seem to be giving me good short and medium indicators to trade from. But I still don't use any MA longer than 14 days. 

I rarely look at 90, 200 day MA's. I don't find them near as relevant in indicating probable future direction as MACD, Stochastic etc on a weekly or monthly chart. 

I prefer Standard Deviation Chanels instead of 90 and 200's for medium term trends as a range guide in conjunction with FA for medium (month/s) to longer term (year/s) trends.

But having said that my main interest is in the more speculative and volatile end of the market. It may change if I get to a point when I decide to hold longer for dividends and take more advantage of the capital gain discount.


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## tcoates (2 June 2008)

Unfortunately, there are no magic numbers. You might not agree (?) with everything said in the video, but have a look at

http://www.youtube.com/watch?v=Z0Me9jkmWLg

I only use a 30 week moving average to get an idea of where it has been.

Tim


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## howardbandy (3 June 2008)

Greetings all --

You can runs tests to find out what works for the issues you plan to trade.  Here is a short AmiBroker code segment that tests all values for the two moving averages, and buys when the first moving average crosses up through the second moving average.  (It also computes the equity and plots the price, the moving average, and the equity.  You only need the first six lines of code to test the system -- the rest is to give a visual plot of the results.)  

Note that there is no restriction in the code to keep the first moving average shorter than the second.  

If the "best" set of lengths has the first moving average length shorter than the second, then the results are telling you that you should be buying strength -- buy as the shorter moving average crosses up through the longer one -- the way most of the literature suggests.  This is results in a "trend following" system.  

If the "best" set of lengths has the first longer then the second, then the results are telling you that you should be selling strength -- buy as the shorter moving average falls down through the longer one.  (Buy as the longer moving average rises up through the shorter one.)  Opposite to common thought.  This results in a "mean reversion" system.

So --- try it out for yourself.  

In most cases -- for most tickers, most time frames, and most measures of goodness (the objective function) -- the "best" set of lengths will suggest that a mean reversion system works better than a trend following system.

One implication is that the common wisdom of buying when the price closes above its, say, 50 day moving average, has it backwards -- that is the time to sell.


//----------------------------
//
//	MACrossSystem.afl
//
//	The classic Moving Average crossover
//	using simple Moving Averages
//

//	Set up the lengths for the moving averages
Length1 = Param("Length1",6,1,81,2);
Length2 = Param("Length2",35,2,200,2);

//	The Moving Average calculations
MA1 = MA(C,Length1);
MA2 = MA(C,Length2);

//	The Buy and Sell logic
//	Buy when MA1 crosses from below MA2 to above MA2.
Buy = Cross(MA1,MA2);
Sell = Cross(MA2,MA1);

//	Compute the equity for the single ticker
e = Equity();
Maxe = LastValue(Highest(e));
Plot( Close, "Price", colorBlack, styleCandle );

//	Plot the MA lines.
Plot(MA1,"MA1",colorGreen,styleLine);
Plot(MA2,"MA2",colorBlue,styleLine);

//	Plot the Buy and Sell arrows.
shape = Buy * shapeUpArrow + Sell * shapeDownArrow;
PlotShapes(shape, IIf(Buy,colorGreen,colorRed), 0, IIf(Buy,Low,High));

//	Plot the equity curve
Plot(e,"Equity",colorBlue,styleLine|styleOwnScale,0,Maxe);
Plot(10000,"",colorBlue,styleLine|styleOwnScale,0,Maxe);
GraphXSpace = 5;
//Figure 9.1 MA Cross System
//
//----------------------------------------------


Thanks for listening,
Howard


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## Whiskers (4 June 2008)

howardbandy said:


> In most cases -- for most tickers, most time frames, and most measures of goodness (the objective function) -- the "best" set of lengths will suggest that a mean reversion system works better than a trend following system.
> 
> One implication is that the common wisdom of buying when the price closes above its, say, 50 day moving average, has it backwards -- that is the time to sell.




Thanks for that post howard.

I'm sometimes considered unorthodox, a bit of a black duck, but that sums up the problem I had reconciling MA's and conventional wisdom. I also had the overwhelming inner belief that one missed the boat getting on, and too often triying to jump ship on an outgoing tide by conventional wisdom.

I don't feel so 'odd' now, especially since my recently discovered kit of indicators tends more to your comments. 

I'll be studying your rational and formula more closely now.


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## tech/a (4 June 2008)

Personally I ask what is it your trying to achieve with an M/A?

Answer that then select your M/A.
Frankly if you cant read what your stocks doing without an M/A--what are you doing?
That said they have their place as a point of reference.


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## Muschu (4 June 2008)

tech/a said:


> Personally I ask what is it your trying to achieve with an M/A?
> 
> Answer that then select your M/A.
> Frankly if you cant read what your stocks doing without an M/A--what are you doing?
> That said they have their place as a point of reference.




The point I was trying to ascertain is just that -- their place as a point of reference.  There seem to be many proponents of the fact that MAs do have a place and I was trying to make some further determinations in that direction.  Are there not some who consider MAs a critical aspect of analysis as there are others who may not?  Perhaps there are even some who would argue that they can read the performance of their stocks without reference to any chart whatsoever.
May he/she who has the perfect system look down upon us mere mortals from on high.


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## tcoates (4 June 2008)

Rick,

Here are some numbers for you...

* Elders (in his second book, whatever that was called) looks at 26 week moving average.

* Articles on the ASX web site suggest using a 30 week moving average

* Weinstein uses (/used) a 30 week moving average.

* Jim Berg uses a 34 week moving average.

Think these would all be EMA. And it depends on how you want to use an moving average.... I use it as a reference point. That's because I find it faster to look at the moving average than to look at the price bars.

To me, it is about looking at the bigger picture. If you can access myasx newsletters then have a look at...

http://www.asx.com.au/resources/newsletters/investor_update/20071016_moving_average_secrets.htm

Whether you plot a weekly moving average over a daily chart, or just look at a weekly chart with the appropriate moving average(s) on it.

FYI - using the above moving averages there is a difference on 75c between the highest and lowest average for BHP. I don't tend to look at value of the moving average, just the direction.

Tim

PS. Good on Tech for not needing a moving average. Some of us just find it easier looking at a chart with one present. 

PPS. Tech - it is the how you use a moving average on a chart that makes the difference between traders. Just because some like a moving average does not make then better or worse than you seem to indicate in your response re needing a moving average.


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## wavepicker (4 June 2008)

tech/a said:


> Personally I ask what is it your trying to achieve with an M/A?
> 
> Answer that then select your M/A.
> Frankly if you cant read what your stocks doing without an M/A--what are you doing?
> That said they have their place as a point of reference.




Excellent point tech, IMO like chasing shadows moving across a wall!!


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## Muschu (5 June 2008)

Many thanks Tim for your constructive response which actually attempted to answer the question.

It seems that many people of acclaim and experience find a MA of value - in one form, another, or several.

If others, experts or otherwise, find a MA useless, vague, immaterial, boring, innaccurate, off-putting, illusionary, delusionary, inferior, shadowy, or outside the set of parameters they choose to use in their strategies... then so be it. Each to their own.  I'm yet to learn of a perfect system.

Tim your references were very helpful; your comments valuable and to the point.  Thank you.
Regards
Rick


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## tech/a (5 June 2008)

There are 4 lines in my reply.
You have chosen to focus on one.



> I'm yet to learn of a perfect system.




Perhaps your search maybe in an inappropriate area (and I dont mean specifically M/A's)


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## Sean K (5 June 2008)

Perhaps this thread should be in the Trading Strategies or Beginners Forum...

Whatever the case, lets keep it friendly, and not be too critical of each other for either not having an advanced understanding of technical indicators, or otherwise.


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## Muschu (5 June 2008)

tech/a said:


> There are 4 lines in my reply.
> You have chosen to focus on one.
> Perhaps your search maybe in an inappropriate area (and I dont mean specifically M/A's)




Tech I apologise if I focused on only one line - I did not mean to do so.

By using an MA I am trying to add to my learner's pool of information.
I can read certain things about stocks without an MA but find the MA useful.
And, yes, I use an MA as a reference.

As a learner I comfortably acknowledge that I have far more questions than answers.  Explanations that people offer are very welcome.

Regards

Rick


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## Rockhoundnz (7 June 2008)

I use 5 and 20 period MAs on my 3 min, 15min, and 60 min charts, and an 89 period MA on my 89 tick chart.


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## wayneL (7 June 2008)

Rockhoundnz said:


> I use 5 and 20 period MAs on my 3 min, 15min, and 60 min charts, and an 89 period MA on my 89 tick chart.




What about on all the time-frames in between? 

utthedoor:


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## Rockhoundnz (7 June 2008)

wayneL said:


> What about on all the time-frames in between?
> 
> utthedoor:




Don't have any others really - 8min, but I don't use that much and 1 min, but I only have a 20 period on that.


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## tech/a (7 June 2008)

Rockhoundnz said:


> I use 5 and 20 period MAs on my 3 min, 15min, and 60 min charts, and an 89 period MA on my 89 tick chart.





So on "Average" how many charts do you have open at one time?


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## CFD (8 June 2008)

Rockhoundnz said:


> I use 5 and 20 period MAs on my 3 min, 15min, and 60 min charts, and an 89 period MA on my 89 tick chart.




What do you do with them?

One good use I've come across for shorter TFs' is to have a 12 SMA on a 5 min chart. Then you can see the speed of any move compared to an hourly TF.


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## tech/a (8 June 2008)

So which timeframe do you take signals from?

All your doing with screwing down timefeames is you look inside the bar.

EG
A daily bar using 60 min bars gives you 6 bars in which to determine whats happening with in that daily bar.
A 3 min time frame lets you see 20 bars within a 60 min bar to see whats happening within the 60 min bar.

I cant see why youd want to do that if your trading short timeframes.
Just pick a timeframe and trade it.
But if you think it useful placing a moving average on it will do Nothing in adding to what price action---Support/Resistance/Breakouts/Tests and volume gives you.

All timeframes have to be traded with similar risk models.
Attempting to analyse whats happening within a daily bar *with a longer term view *using shorter timeframes is totally useless.
It will just stuff you up.


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## AMR (8 June 2008)

I use MAs as "a bendy trendline". I.e I optimise the EMA until it touches the previous lows. I then use a break of the trendline as a sell signal.


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## Rockhoundnz (10 June 2008)

tech/a said:


> So on "Average" how many charts do you have open at one time?




Typically, I trade using 5 charts. 60 min and 15 min for overall trend and 3 min, 1 min and 89 tick charts for set-ups, entry and exit.

I use the MAs for trend confirmation on 60 and 15 min, and as potential support and resistance points.


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## wayneL (10 June 2008)

Rockhoundnz said:


> Typically, I trade using 5 charts. 60 min and 15 min for overall trend and 3 min, 1 min and 89 tick charts for set-ups, entry and exit.
> 
> I use the MAs for trend confirmation on 60 and 15 min, and as potential support and resistance points.




5?

Is that all?


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## Rockhoundnz (10 June 2008)

wayneL said:


> 5?
> 
> Is that all?




Of course I do use other indicators and do look at daily and monthly charts, but for actual trading I'm only really looking at those 5 charts and have 5 and 20 period simple MAs on them all except the 89tick chart which is an 89 period exponential MA.


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## wayneL (10 June 2008)

Rockhoundnz said:


> Of course I do use other indicators and do look at daily and monthly charts, but for actual trading I'm only really looking at those 5 charts and have 5 and 20 period simple MAs on them all except the 89tick chart which is an 89 period exponential MA.



I find the 87 tick chart better. 

I was being a bit sarcastic really. 5 charts? I find 2 plenty (time frames depend on phase of the moon, length of sunlight hours and pollen count), with the odd glance at the daily.


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## MRC & Co (10 June 2008)

wayneL said:


> I was being a bit sarcastic really. 5 charts? I find 2 plenty (time frames depend on phase of the moon, length of sunlight hours and pollen count), with the odd glance at the daily.




LOL!!!!!!!!!!!!

Between you and professor, I have no need to visit a comedy club!!!!!!

You may have to factor in a decimation of the pollen count though, with the fall of the honey bee!


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## Trembling Hand (10 June 2008)

Rockhoundnz said:


> Typically, I trade using 5 charts. 60 min and 15 min for overall trend and 3 min, 1 min and 89 tick charts for set-ups, entry and exit.
> 
> I use the MAs for trend confirmation on 60 and 15 min, and as potential support and resistance points.






Rockhoundnz said:


> Of course I do use other indicators and do look at daily and monthly charts, but for actual trading I'm only really looking at those 5 charts and have 5 and 20 period simple MAs on them all except the 89tick chart which is an 89 period exponential MA.




Surely if you are using a tick chart for trading signals the other 4 charts are just unnecessary duplication of the same price patterns. And then you have no doubt got indicators on each charts?? How do you make a trade with so many signals, are you looking for a setup on all charts at the same time?


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## Rockhoundnz (10 June 2008)

Trembling Hand said:


> Surely if you are using a tick chart for trading signals the other 4 charts are just unnecessary duplication of the same price patterns. And then you have no doubt got indicators on each charts?? How do you make a trade with so many signals, are you looking for a setup on all charts at the same time?




I feel like I'm starting to repeat myself here, nonetheless let me try and make this as clear as possible. I use the longer timeframes (60 and 15 min) for defining trend, and the three minute chart for set-ups (mostly). The 1 minute and 89tick charts are used for entry depending on the type of set-up. The 60 and 15 min charts pretty much only have MAs on them, so pretty simple there really.

So, I'm stepping through them in order - looking at 15 and 60 min for trend once in a while (just takes a quick glance) and then focussing on the other 3 charts most of the time. Pretty simple really.

How about you TH?


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## Trembling Hand (10 June 2008)

Rockhoundnz said:


> How about you TH?




I have 20 charts on my screens.

But hardly look at any of them.


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## prawn_86 (10 June 2008)

The forex method im demoing uses WMA's, lots of them.

As to time frames though, i only have one chart open. Some trade with 2, one to see the overall trend (say 1 minute chart) the other to execute (tick chart)

I dotn worry about the 1 min one as scalping is just in and out so the overall trend doesnt matter really, unless it is a major S/R point


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## Rockhoundnz (10 June 2008)

Trembling Hand said:


> I have 20 charts on my screens.
> 
> But hardly look at any of them.





I was only talking about my main screen, I forgot about the other 3...


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## pavilion103 (28 June 2011)

If I'm looking to hold a position between 1-4 weeks, does a 20 day MA make sense? I currently have a 15 day MA but am thinking it is too small. Is it better to maybe go even bigger? 

I know it all depends, but really I just want to make sure I am looking at a MA that make sense e.g. I wouldn't use a 200 day MA for this shorter term trading. 

Any thoughts would be much appreciated?


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## Boggo (28 June 2011)

pavilion103 said:


> Any thoughts would be much appreciated?




After reading Carolyn Boroden's book "Fibonacci Trading" I could see some merit in what she was saying regarding identifying and trading with the trend, she uses a 34 period EMA as a trend guide.
All my breakout scans now inhibit any results that are below the 34 EMA, I also plot it on all my charts as a quick view of the trend.

Plot it on a few stocks (even PEN for a giggle) and see what you think.

If you are doing some backtesting inhibit any signals that are below the 34 EMA based on the close and let me know if you think it changes anything. (C >= Mov(C,34,E))

http://www.fibonacciqueen.com/public/main.cfm

Cheers


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## colion (29 June 2011)

There are a number of ways of getting a handle on trend, including a moving average, linear regression, higher/lower highs and low, etc.  However, the optimum setting for an indicator will be a function of the stock or index, the timeframe, etc. and most importantly will not be constant over time.

As i understand your note, you are using EMA(34) as a buy/sell signal.  That can obviously be done but don't assume that a single setting of 34 will produce the optimum equity in your account or that it will always produce a positive return.  You can check this out with software that permits you to input your system with optimization of the EMA period and output the equity change for the sample size that you choose.

I quickly looked at the EMA(34) long only system and EMA(34) tends to produce a positive return for many (not all) stocks but the results were often substantially inferior to those using an optimized period which can be quite differfent from 34.  

If you like the idea of using a moving average, you might want to consider using an adaptive moving average that will adjust to changing market conditions and does not rely on a one size fits all restriction.


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## Boggo (29 June 2011)

Boggo said:


> All my breakout scans now *inhibit* any results that are below the 34 EMA, I also plot it on all my charts as a quick view of the trend.
> If you are doing some backtesting *inhibit* any signals that are below the 34 EMA







colion said:


> As i understand your note, you are using EMA(34) as a buy/sell signal.




Not sure if you are referring to my post re the 34 EMA, if yes then you completely misunderstand what I am saying.

Moving averages are useless on their own.

Cheers


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## colion (29 June 2011)

Boggo said:


> Not sure if you are referring to my post re the 34 EMA, if yes then you completely misunderstand what I am saying.
> 
> Moving averages are useless on their own.
> 
> Cheers




If that's the case then we agree.


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## cudderbean (30 June 2011)

Muschu said:


> Hi
> I use a variety of MA periods when looking at basic charts.
> What I have been tending to do is use a simple 2-line MA200 if looking at a 1-5 year chart; but both a 30 and 200 MA if looking at 1-2 month chart.
> A question however:  If I am looking at a SP over a relatively short period, say 1-2 months, is there a "preferable" MA setting? ie:  Which is associated with greater significance? eg:  As to when the MA is crossed by the SP?
> ...




I use EMAs simply to tell me the *direction *of a trend. For the trend itself I draw a trendline.

I like 5, 8, 21, 125, and 150 EMAs respectively for very short term to long term trends.

For me its the direction of the EMA that counts, not whether the price is above or below it. Although when short term EMAs cross above or below longer term EMAs it might give you warning of a trend reversal.... worth keeping an eye on, but I don't use those crossover moments as buy or sell signals.

I also like EMAs because they are not only more sensitive than SMAs but also much simpler to calculate in Excel which I use to constantly scan the market live data.

If yesterday's 5 EMA was higher than the day before's 5EMA then the  SHORT term trend was up *yesterday*. If *today *I am alerted that my automatically generated *short term UP trend LINE* has been broken by the price action, then go and eyeball the daily, weekly and intraday charts, course of sales, support/resistance levels and volume to see if anything serious enough is happening to warrant a buy or sell.

Good luck, mate.


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## pavilion103 (13 July 2011)

I am assuming that the moving average used should have something to do with the length that someone intends to hold a trade?

For example if I am looking to hold a position for between 5-30 days, then a 30 day MA might be best?
If I am looking to hold a position for a few months then a 200 day MA might be best?

I am thinking of setting my moving average to the maximum number of days I intend to hold a trade e.g. 30 days. There may be a very few that I happen to hold for longer but it would be the exception rather than the rule.


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## tech/a (13 July 2011)

Its wise to remember exactly what an M/A is.
An average (various ways of calculation) of past data.
so by the time you see anything meaningful in any time frame--- relative to that time frame--- the bulk of the action HAS TO HAVE occurred.
so its usefulness going forward in ANY TIME FRAME is --in my view---questionable.

Generally the Fat lady has sung and is on her way back to her motel!


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## pavilion103 (13 July 2011)

tech/a said:


> Its wise to remember exactly what an M/A is.
> An average (various ways of calculation) of past data.
> so by the time you see anything meaningful in any time frame--- relative to that time frame--- the bulk of the action HAS TO HAVE occurred.
> so its usefulness going forward in ANY TIME FRAME is --in my view---questionable.
> ...




Exactly what I was thinking just after I posted that. It's not like the MA is predictive in any way. 
Having just read Curtis Arnold's PPS Trading System he uses a trend filter including use of both the 18-day and 40-day MA. It seems a bit much for me. 

I think I'll leave the 40-day MA on my chart for now as a general guide of the trend. I've found that it has helped me.


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## Frankie (13 July 2011)

When using moving averages I prefer to apply them to trending stocks (not stocks moving sideways).

I’ve experimented using 1 moving average, 2 moving averages and multiple moving averages for my buy and sell signals.

I’d like to briefly touch upon my use of 2 moving averages for now.

I have been told by others in the past that the 10 and 30 day moving average cross over signal is very popular for entry/exit signals. However, when I apply it stocks on my watchlist the signals may be either too lagged or too soon depending on the stock I’m analysing.

By starting with the 10 and 30 day moving averages, but then tweaking each one either up or down in time frame, I try to eliminate lag or early entry signals.

Adjusting the moving averages based on the actual trend gives me a better guide as to the moving averages I will use for my crossover signal.


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## Mistagear (13 July 2011)

pavilion103 said:


> Exactly what I was thinking just after I posted that. It's not like the MA is predictive in any way.
> Having just read Curtis Arnold's PPS Trading System he uses a trend filter including use of both the 18-day and 40-day MA. It seems a bit much for me.
> 
> I think I'll leave the 40-day MA on my chart for now as a general guide of the trend. I've found that it has helped me.




My preferred MA is none, nothing, nadda.    and my other preference is use no other indicators on my charts.
If I'm looking at a chart I dont want a lagging indicator distracting me from the most recent information available, information as close as possible to the next move into the future. 
Reading price action is a simple art which gives a trader, the most up to date,most relevant, least lagging information available.

The other thing with indicators which has me wondering is, TA packages have been heavily promoted for decades by Industry heavyweights with unlimited funds, who are now using state of the art Algo' Trading systems. My thought is, how easy would it now be, to know what % reaction occurs if price were pushed to different prescribed levels, say divergence in an indicator or a MA cross etc.

In conclusion, I think there is far greater benefit to be gained by the individual trader by NOT going down the technical indicator pathway to the nearest  finance industry corral.
Personal paranoid opinion only
Cheers, M


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## pavilion103 (13 July 2011)

Mistagear said:


> My preferred MA is none, nothing, nadda.    and my other preference is use no other indicators on my charts.
> If I'm looking at a chart I dont want a lagging indicator distracting me from the most recent information available, information as close as possible to the next move into the future.
> Reading price action is a simple art which gives a trader, the most up to date,most relevant, least lagging information available.
> 
> ...




Thanks for that. 

I am mainly using VSA and am trying to use price and volume as much as possible to make my decisions. I do feel that other indicators do distract me at times. I just need to practice reading price and volume action more and more I think.


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## tech/a (13 July 2011)

Interesting comments.

Reading Price action is "technical analysis" also in my view.
I think though that the REAL reason for the question of M/A usage is one of identifying trends.
This is in itself the biggest question a trader faces.

*Is a trend beginning/pausing/continuing/stopping?*

How can I *DEFINITIVELY* know this at* THE TIME* its happening.

This should be treated as a topic in its own right so I have started a thread on it.
I wont have time to post up some example and discussion before the Weekend but thought there maybe others who would like to post their thoughts before hand.

See separate thread.


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## tinhat (14 July 2011)

I'm a "value investor" not a trader but I use MAs to look at trend and sentiment and time buys.

I started using Guppy multiple moving averages but after reading Stan Weinstein's 'Secrets For Profiting in Bull and Bear Markets'  and Alan Hull's 'Active Investing', I mainly look at weekly charts using 50, 30 and 10 period MAs. I also have Bollinger bands on my chart which uses the 20 MA as the central cord

I do find the 30 MA quite useful in a lot of ways. Referring to weekly charts:

If price drops below the 30w MA is this is a bearish signal.

I look to see if the 30w MA is trending up and whether the XAO 30w MA is also trending up before buying. I broke that rule and bought a few stocks in June so we will see if that was a mistake or not. The problem with a sideways market is that last year the XAO 30w MA did not start trending up until December and had already retraced 50% of its losses from the April correction.

I also use the 30w MA as one of several methods I have for setting trailing stop-losses.

I know that Lance Lai (of switzer.com) uses the 10day, 30day MA and looks for the "golden cross" of when the 10day MA breaks below the 30day MA as a bearish signal.


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## cynic (14 July 2011)

Mistagear said:


> My preferred MA is none, nothing, nadda.




Yes! I came to a similar conclusion after considering MA's (and MMA's) during my early days. I very quickly discarded them after identifying that they were not appropriate for my preferred trading style.




Mistagear said:


> In conclusion, I think there is far greater benefit to be gained by the individual trader by NOT going down the technical indicator pathway to the nearest  finance industry corral.
> Personal paranoid opinion only




Not paranoid at all! All is fair in profiteering within stockmarkets, just ask ASIC! 

As I often tell people when they accuse me of paranoia: "It's not that I'm paranoid, it's just that everybody really is out to get me!"


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## pixel (14 July 2011)

fwiw and : I don't take notice of long-period MAs, mainly because they're lagging by around half the applied period. So if you take 30weeks, you react to something that happened a Quarter ago.
I do use MAs, however, to smooth out jitters between neighbouring "ticks". By that I mean, if I use a daily chart, I apply a 3-day EMA simply to eliminate "one-day wonders".

In any case, these short-term smoothed price charts are only a limited part of my analysis; volume and risk assessment are more important to me.


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## colion (15 July 2011)

pixel said:


> fwiw and : I don't take notice of long-period MAs, mainly because they're lagging by around half the applied period. So if you take 30weeks, you react to something that happened a Quarter ago.
> I do use MAs, however, to smooth out jitters between neighbouring "ticks". By that I mean, if I use a daily chart, I apply a 3-day EMA simply to eliminate "one-day wonders".
> 
> In any case, these short-term smoothed price charts are only a limited part of my analysis; volume and risk assessment are more important to me.




Along the same lines short MA/EMA are useful signal lines for indicators.


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