Question About Moving Averages

caplan8293 · Oct 28, 2003

Hi All,

Lets say that I had a simple trading system in place using moving averages (the length does not matter). If the price was above the moving average, I would buy. If the price was below the moving average, I would sell. I know this is not the best system, but I am starting out simple.

My question is this: Would it be better to sell if the current price <= (less than or equals) the MA or would it be better to sell if the current price is < (less than) the MA. I have been looking at lots of charts and have a good case for each. However, I want to choose the best one and am having trouble making the decision.

So, in closing, which do you TA gurus think is better:

if (curPrice <= MA) { sell() }

or

if (curPrice < MA) { sell() }

Thanks in advance for any responses.

c

gms · Oct 28, 2003

In general, if you insist on using MAs, I'd suggest you wait until very near or after the close of your bar to better ascertain if indeed the position has crossed the MA or not.

T-REX · Oct 28, 2003

This one is best!

Quote from caplan8293:

if (curPrice < MA) { sell() }

c [/B]

blb078 · Oct 28, 2003

check out T-REX's journal a similar strategy seems to be working for him.

balda · Oct 28, 2003

Quote from caplan8293:

if (curPrice <= MA) { sell() }

or

if (curPrice < MA) { sell() }

Thanks in advance for any responses.

c

if (curPrice <= MA) { sell() }

than I assume

if (curPrice >= MA) { buy() }

system will get confused just on this and you will have to use additional filter

hoodooman · Oct 28, 2003

try this swing trade

Two moving averages. 20 and 40 ema's, price channel and slow stochastic.

Buy only stocks where these moving averages parallel each other.
If the moving averages cross, forget about that stock.

Buy when the stock moves below the 20 ema or even the 40 ema (but the ema's never cross) and the slow stochastic bottoms out and then starts up. That is your buy signal.

Sell for a loss if the price moves down and penetrates the lower price channel or for a profit when the price penetrates the upper price channel.

regards

inandlong · Oct 28, 2003

I am not a TA guru, however I agree with gms and T-Rex.

Caveat: this is for entry only.

PetaDollar · Oct 28, 2003

Quote from caplan8293:

which do you TA gurus think is better:

The wise ass (but best) answer is figure out what works for you.

When I traded a single moving average I waited for a close above (for longs) or below (for shorts) to open the position. But if I had to do it again, I think I would take a position as price moved towards the average, and dump it right away if price started moving back.

OddTrader · Oct 28, 2003

Quote from caplan8293:

So, in closing, which do you TA gurus think is better:

One of the TA gurus using MAs is Scot Lowry, who specifies his system in the book: The Magic of Moving Averages (By Traders Press 1998).

NKNY · Oct 28, 2003

Quote from hoodooman:

try this swing trade

Two moving averages. 20 and 40 ema's, price channel and slow stochastic.

Buy only stocks where these moving averages parallel each other.
If the moving averages cross, forget about that stock.

Buy when the stock moves below the 20 ema or even the 40 ema (but the ema's never cross) and the slow stochastic bottoms out and then starts up. That is your buy signal.

Sell for a loss if the price moves down and penetrates the lower price channel or for a profit when the price penetrates the upper price channel.

regards

What kind of channel do you use hoodooman. would a keltner due...? also when you say parallel do you mean really parallel.

I use a method that is similar. But I use the 18 and 40 sma with the cci . Also look at weekly stuff.

Nick